Is An Education Loan Or An Education Plan Better For A Child's Future?
Published On Mar 28, 2022 10:00 AM By InsuranceDekho
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It's hard to forecast a child's financial needs in the future, and many parents incorrectly feel that a school loan would save them. Although an education loan may be a reasonable alternative, it cannot replace the need for investment in order to attain the goal, because the child may also require assistance in other areas. While regular income can pay tuition and other expenses, the cost of furthering one's education is a different storey. Given the difficulty of projecting a child's future demands, as well as the high cost of a career-defining education, such as tuition, books, admission, and other expenses, which alternative would you prefer: an education loan or saving for a child's education? (Strategy for Education)
Choosing Between an Education Loan and an Education Insurance Plan
Many parents pick a student loan to satisfy their financial commitments, while others choose an education insurance plan.
- Education loans can only be used to pay for your child's schooling; however, saving for the future can cover your child's education as well as other expenses.
- Loans for education may be able to help you stretch the expense of your child's education over a longer period of time. In contrast, an education insurance plan will sensibly save and invest your money to ensure that your child's educational and other needs are covered.
- A student loan, like any other loan, is a financial burden on your child, and hence on you. When your kid completes his or her studies and finds job, you must repay the loan in equal monthly instalments (EMIs).
- Investment results in more money. If you choose a ULIP plan, you can invest in corporate bonds, government securities, shares, and a number of other assets. If you want to invest for a longer length of time, say 20 years, you can switch your premium from shares to loans after 15 years to protect yourself from market fluctuations.
- Plans that cover educational expenses Your family, especially your child, deserves your love and attention. Invest in (and reinvest in) a family insurance plan to ensure that everyone is covered. Your family can receive the insured amount as emergency death protection in the event of an unforeseen occurrence.
- In contrast to school loans, kid insurance programmes provide a host of tax advantages. Above all, education insurance policies allow you to avoid having to repay your debts. You can also withdraw some funds now and place the remainder in an investing account to be used later.
So, if you're a new parent seeking a mutually advantageous plan that allows you to save and reinvest for your child's future benefit, this is the plan for you. Consider getting your child an education plan. If you have enough money and no plans to raise it, you can take out an education loan; nevertheless, the peace of mind that comes from saving and investing your hard-earned money is priceless to you and your family. Finally, an education or ULIP plan is a wonderful way to both protect and invest. You also provide your kid with financial security, allowing you to meet their basic necessities such as schools, counseling, and other small expenses.
Do read - In India, How Has ULIP Changed?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.