How To Fund Your Child’s Higher Education With A Child Insurance Policy?

Child and child education go completely hand in hand if you are a responsible parent. As soon as you bring your child into existence, you start worrying about their future needs and requirements. We all know worrying is not enough and you have to plan your child’s future so that he gets a better world to live with or without you.

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In this article, let us understand how you can utilize a child insurance policy to fund your child’s higher education so that your kid is financially sound always.

What exactly is Child Insurance Plan?

A child insurance plan is an investment plus insurance plan offered by many companies for the safety of your child’s future dreams and goals. It offers life cover and provides flexible playouts during all the crucial steps in your child’s life. A child insurance plan is one of the best ways to save a good amount of money with regular investments for your child’s future.

Now, as you know about Child Education Plan, here are some tips as to how you can take care of your child’s higher education and other goals.

  1. Make Plans

    First things first, identify the amount of money you are planning to invest based on your child’s interest. Decide the amount you are willing to invest in your child’s education, extra-curricular activities, travel, etc., and then start investing.

  2. Be An Early Bird

    It is said that an early bird catches the worm and it is true when it comes to your child’s plan. Early investment in your Child’s Education plan will bring maximum returns with minimal risks and premiums. Being late in investing will lead to higher premiums with low returns. A small amount of investment in the early years of a child can bring a substantially large corpus. Child Education plan works same as a term plan. Investment at an early age leads to minimal premiums and higher returns.

  3. You Before Anyone Else

    If you have to protect your family, the first thing to do is to protect yourself. By protecting yourself, we mean that insuring yourself against life uncertainties.  Your life insurance will help in your child’s future and higher education even if you are no more there to take care of their expenses.

  4. Decide Your Planning Horizon

    Time horizon is the fixed time in the future at which a certain process is assumed to end. In the case of higher education, you can calculate the years your child will require to complete his/her education and plan your investments accordingly.

    The longer the planning horizon, the better it is for you to plan and invest.

  5. Estimation of Cost

    Estimating the future cost of education of your child helps you plan your investment accordingly. This will save you from a big financial burden in the future. The cost of education varies from person to person. It depends on various factors like,

    Type of course your child may be interested in

    • Admission to private or government university

    • Global exposure of education or national exposure

    • Want to be an undergraduate, graduate, or postgraduate

    • Extra courses along with main degrees

    There are many more factors that depend on a child’s interest and ambition, which are a major point of consideration.

  6. Calculation Of Your Existing Assets And Liabilities

    For better planning of child investment, you need to know about all your existing assets and liabilities. Knowing them will help you plan for your child’s future much more efficiently. It is important to know that you should invest in such a way that you do not dip for other financial goals in your life, for example, your retirement plans for the higher education of your child.

    It is important to know that you should never prioritize things that do not have future interests just for the sake of short-term happiness.

  7. Start Smart Saving

     Once you are familiar with the approximate cost for your child’s investment, it is important to save accordingly. An easy way to save money is

    • Opt for Systematic Investment Plan in mutual funds

    • Opt for a Recurring Deposit with your bank

    These are some of the easy and hassle-free ways that will help you save your money for your future needs.

  8. Smart Investment

    Designing asset allocation and investing accordingly is the smartest way to secure your money. Save and invest regularly in the account specially mapped towards your child’s education. A well-planned asset allocation increases your return exponentially.

  9. Prepare Yourself For Unexpected

    Always be ready for your child’s unexpected needs and demands. Apart from tuition fees and school fees, there are many other unexpected costs that your child could demand. From accommodations to pocket money, there are a lot of places where you will have to help your child financially.

  10. Start now

    There is no tomorrow when it comes to planning for your child’s future. As we all know that future is very uncertain, it is important to start saving and investing in your child’s higher education needs right away to ensure that he/she has everything they deserve in the future.

    Here are some different types of child education plans and their key features and benefits that will help you make the best decision for your child. Have a look and make an informed choice.

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Types of child plan

There are different types of child plans available as per your requirement. You can choose the one best suited for your child and the one that is good in your pocket as well. Following are different types of child plan:

  1. Child Insurance Plan

    They come with both insurance and investment elements. A child insurance plan provides a security net for your child even if unfortunately, something happens to you and you are not around. Child insurance plan is further divided into two categories:

    • Regular premium plan

    • Single premium plan

  2. Unit linked child plans (ULIPS)

    These come with great returns some advantages are as follows:

    • Flexibility of withdrawal alternatives

    • High returns

    • Appreciation of value with time

  3. Money-back plans

    They cater to individual’s needs for future expenses. They come with efficient planning alternatives and can be used as a child’s plan.

  4. Endowment plans

    It works both as insurance as well investment plan as you are guaranteed an amount at the end of the endowment period. This makes an excellent saving tool for your child’s future

Key features of Child Insurance Plan

A Child insurance plan comes with many useful features to ensure a rewarding return and protection for your child. Here are some key features of the best Child Insurance plans in India:

  • Capital guarantee

  • Waiver of premium

  • Partial payments

  • Sum assured

  • Tax benefits

  • Immediate financial protection

  • Loan benefits

Child Savings Plan vs Sukanya Samriddhi Yojana Scheme and Public Provident Fund

Additional riders

Certain riders are available, which give you more than just a simple life insurance policy. These riders are available in three sub-categories:

  1. Accidental Death and Disability Benefit

    The Accidental Death and Disability Rider Benefit pay the extra sum assured in the event of your unfortunate mishap causing death or disability

  2. Premium Waiver Benefit

    This rider may be already added to the best child education plan, so check your policy document in this regard

  3. Critical Illness Rider Benefit

    Critical Illness rider benefit offers coverage for a pre-determined set of critical diseases

Benefits of Child Insurance Plan

  • Flexible payment of funds

  • Secured loans are available

  • You can choose from either ULIP or Endowment plan

  • Flexible premium payment options

  • Funds available on the demise of the insured or after the maturity of the policy

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Sum It Up

It is very important to arrange for funds for your child’s higher education much in advance. These saving and investment tips can help you plan a better future in which your child can enjoy and fulfill his dreams without any financial problems whatsoever. Be your child’s hero, buy policies that help your child in his/her higher education and future.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:-
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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