It is the dream of every parent to see his child touch the pinnacle of success with the best education. But with the rising cost of education, parents may be worried about giving their children the best education. However, by planning early you can secure your child’s future and do not have to give up on their dreams due to a shortage of funds.
It is also important to keep in mind that you don’t threaten your financial stability to fund ambitious educational plans for the children. Education loans or self-funding by your child can be considered beyond a certain level. One very difficult aspect of securing your child’s education is to select the most appropriate child education investment plans from the several investment options available to secure your child’s future.
There are many investment options available to secure your child’s future and it is better to diversify across a few investment options.
Let’s understand about Child’s education plan.
What is Child’s Education Plan?
A child education plan is a financial tool that offers the youngster the potential to imagine and dream big with protection and investment returns. The youngster needs to thoroughly consider the payment alternative before aspiring to achieve greatness. A child education plan safeguards a child’s future and allows them to plan for their future without being self-conscious by a lack of financial means. With the assured education plan you can pick flexible payment periods based on your child’s developmental milestones. Parents can save money inefficiently manner, to guarantee that their child’s future aspirations are met with a child education plan. Start planning for your child’s education.
Key features and benefits of child’s education plan
Features of Child’s Education Plan
To provide your child with good education is essential, as quality education makes it easier for a bright future and makes young learners into successful individuals. You need to ensure that cash flow should not stop at any crucial stage of your child’s growth. As the costs of higher education are on the rise, make sure your child gets the best education, for that you need to plan early.
The features of a child education plan help you to make an informed decision.
- In a child investment plan, minimum investment tenure needs to be considered for at least 3 years, which can be increased in multiples of 3 months. If the plan is for a longer period, you get a higher pay out at maturity.
- The minimum amount to be invested in a child education plan should be Rs. 500/- and gradually, increase it in multiples of Rs.100.
- Funding in the investment phase for regular premiums can be sent through a standing instruction on a parent’s bank account. It can either be done by depositing a cheque or cash.
- You can receive quarterly, annually, minimum tenure of the phase, 12 months, and multiples of 1-month pay-outs on your child investment plan.
Benefits of Education Plan
Most parents’ emphasis on education, determines the quality of life their child will lead in the future. Child education plans are the kind of investment options crafted for your child’s future financial needs. These education plans will allow you to invest, grow and provide for your child’s goal without much effort.
Benefits
- Early, the regular, and small amount invested in a child education plan can be more fruitful, as it eases the financial burden, due to spreading over a more extended period. Gathering notable funds can reduce the pressure of providing for their education.
- The child education plan allows you to categorize your investments in life and it assures you that their future will not be at risk, under any circumstances.
- Protection in an unpredicted situation like the benefits of financial cover to the child in case of the death of a parent, the child gets at least 100% of the sum insured amount. The maturity amount is approximately 10 times the premium cost for higher education expenses.
- Due to the rise in education costs, investing in a child-saving plan would offer enough funds that will help your child to meet all the key educational milestones in his life.
- Permission of partial withdrawals will help to fund a special course your child wants to take up, as certain plans offer periodic pay-outs to help you pay for the expenses incurred to enhance your child’s talent.
- Adopt a dynamic fund allocation strategy, to make the most of the amount invested and save it from capital loss. You can go for a systematic transfer plan when the market is volatile.
- It helps you to fund your child’s school fees, in case the parent dies, the insurance company immediately pays a percentage of the sum assured. At the end of the policy terms certain percentage is paid annually. A sufficient amount is paid for your child’s school fees even in your absence.
- Child education plans offer a great investment scheme, and the premium paid on a child education plan is eligible for tax deduction under section 80C, up to a limit of Rs. 1.5 lakh in a year. Also, avail of tax benefits on the maturity amount under section 10 (10D).
- A child’s education plan not only helps you reach the goal by investing but also provides financial security to your family.
- Enjoy three in one tax benefits by investing in the plan, capital growth, and withdrawals from the plan, which are all exempt from tax.
- The premium paid on the child education plan qualifies for tax deduction up to Rs 1.5 lakhs under section 80C in a financial year.
- The growth of funds or any switches between debt and equity funds within the plan is exempt from tax.
- Tax-free partial withdrawals from the plan after the five-year lock-in period.
Why do you need a child’s education plan?
Do you want to meet larger-than-life goals for your child’s education? Make these plans a necessity with these 5 compelling reasons.
- The rising cost of education: The cost of education is increasing with time, as more technological advancements and innovations are introduced in the education sector. A child education plan helps to have the required funding for the college or professional course fees.
- Uncertainty of future work environment: Higher education facilitates additional learning needs. Plan for these uncertainties related to your child’s career with a good child insurance plan.
- Protect against uncertainties in Life: The untimely demise of parents is the biggest threat to the dream of your child and family. Child education plans have the option to continue investing in the planned goals of your child.
- Avoid borrowing for education: To pursue higher education, an education loan may sound like a more logical solution due to its tax-saving benefits, but you still need to pay interest on the education loan. Investment in the child education plan will help you to keep your borrowings low.
- Promote Entrepreneurship: One of the greatest challenges for entrepreneurs today is to raise capital. You can fuel your child’s entrepreneur ambitions early with investment.
Child’s Education Plan
FAQs
How child education plan is special?
A child education plan offers an exhaustive benefit of life insurance cover along with the maturity gain. It ensures that a child’s education is not affected due to a shortage of funds. The child will receive a lump sum pay out to fund their education with a child education plan in place.
When to buy a child’s education plan?
The child’s education plan should be bought as soon as the child is born. To meet the financial contingencies that may arise due to the surging cost of education.
How to choose the right education plan?
The best child education plan should be chosen carefully considering the factors like premium waiver benefit, your monthly saving, number of children, adequate cover, rate of inflation, and market conditions.
Why is it important to have a beneficiary or nominee in a child plan?
Beneficiary plays a crucial role in a child’s plan, as when the parent dies, all the money goes to the beneficiary. So you need to know and understand the role of the beneficiary properly.
What is the difference between a nominee and a beneficiary?
A nominee is a person appointed or nominated by the insured to take care of his/her assets, financial records, etc. after his demise. Whereas a beneficiary is a person who has a financial interest in the policy holder’s life, it can be either a financial institution like a bank.