What Are Child Education Plans?
Published On Sep 15, 2021
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Child Education Plans are a hybrid of investment and insurance products. These programs accumulate a lump sum amount over time. The lump amount is paid out at the policy's maturity and can be used for the child's education and marriage.In this article, we will outline the characteristics of an ideal Child Education Plan that you, as a parent, may choose for your child's bright future. Choosing the right child education plan is critical for the long-term development of the child. Given the degree of rivalry and growing educational costs, there is pressure on both parents and children when it comes to higher education - pressure on children to achieve and pressure on parents to provide adequate money for the degree.
What Are Child Education Plans?
A child education plan is a financial instrument that serves two functions: protection and investment return. Such plans are also known as kid insurance plans because of the protection component they provide. Almost every life insurance company offers kid insurance coverage, giving parents the option of securing their children's financial future. Both market-linked ULIP plans and classic endowment plans are available for children. A child insurance plan works similarly to a life insurance plan, however, some policies stop when the kid reaches the age of 18 or 21, depending on the plan and insurer.
Also read - Investment Options To Secure Your Child's Future
Characteristics of an Ideal Child Education Plan
The following are some characteristics of an excellent Child Education Plan:
1. Partial Withdrawal Is Possible
The plan's liquidity is quite important. The policy in Child Education Plans allows for partial liquidity or withdrawal. These Withdrawals might be utilised at critical junctures in the child's life.
2. Assured Sum
The Sum Assured is paid in the case of the policyholder's premature or unfortunate death. The general guideline is that the sum assured must be greater than ten times the policyholder's total earnings.
3. Tax Advantages
Child Education Plans are free from the highest tax level. It is the E-E-E category, which is the highest grade of tax advantage provided by Indian Tax Laws.
4. Complete Financial Security
These plans provide a lump sum payment in the event of the death of the policyholder or the single earning member of the family who was responsible for paying the premiums. The guaranteed money might be utilised to cover unexpected expenditures right away.
5. Policy Term Selection
The Policy Term can be customised to meet your needs. The duration of the insurance should be set with the child's age and all of the child's anticipated costs in mind.
6. Premium Exemption
The Waiver of Premium Benefit kicks in if the policyholder dies unexpectedly and the family is unable to pay the premium. The remaining premiums are subsequently paid on behalf of the policyholder by the Insurance Company.
7. Facility for Loans
When the insurance reaches a specific age, it can be utilised to get a loan for big costs.
One of the most significant decisions you will have to make in your life is selecting the finest educational plan for your children. The tips offered above will help you choose the finest plan from among the various alternatives on the market. You may be able to save enough money to meet your child's future college expenses if you use the right method. While the costs of child plans are somewhat higher than those of term plans, the maturity benefits make them a worthwhile investment.
You may also like to read - Reasons Why You Must Invest In A Child Life Insurance Plan
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.