Child Education Plans

What is a Child Plan?

A Child Education Plan allows you to invest in the future by creating funds and investing in those funds, offering a lump sum upon policy maturity. However, it will also give out other payment options in case of a need. The plan offers a large sum assured for reaching milestones like higher education and marriage of the children.

You can pay a yearly payment and then get the benefits of the policy upon its maturity. However, you must understand the features as well as the requirements of the policy. 

Features of Child Plans

Given the benefits of the plan, it offers rewarding outcomes on the investment. In addition, the Child Education Plan offers coverage in times of need and secures the future obligations of your child. 

Here are some features that make the plan stand out:

1. Premium

   The plan offers flexibility in premium payment, wherein the buyer can choose between monthly, quarterly, or annual payment modes. Since the plan comes with an in-built waiver of premium rider, the cover continues in case of untimely demise of the parent/s. A lump sum amount is paid to the child upon reaching policy maturity or life goals.

2. Withdrawal

   The Child Education Plan is an intelligent investment as it also offers a withdrawal facility before maturity. The Child Education plan offers a partial withdrawal facility when the child turns 18. Full withdrawal can be taken once the child attains the age of 21.

3. Sum Assured

   Child education plans offer a high sum assured for comparatively lower premiums. This sum assured helps the policyholder stay financially secure in the presence or absence of the parents. 

4. Payments

   The Child Education Plan will offer you flexible payment options. You can either pay in regular premiums or a single premium. 

   • Regular Premium: You will need to pay the premium in easy and flexible options. You can choose to pay annually, semi-annually, or quarterly. 
   • Single-Premium: As the name states itself, you need to pay only once for the plan. 

5. Inflation

   This can be a real headache if you haven't planned for it. In the Child Education Plan, you have assured 10-12% returns. In addition, the plan will offer you tax benefits under the relevant sections of the law. 

6. Immediate Benefits

   The Child Education Plan also offers you coverage in case of the demise of parent/s. The child is then paid a lump sum amount to cover future expenses. The sum assured received is also tax-free under the IT Act. 

7. Maturity

   You can either receive the amount as income or on a lump-sum basis. In addition, choose the policy term following the age of your child. You also must select the premiums carefully and in sync with your budget. 

8. Riders

   Most of the Child Education Plan comes with an in-built waiver of premium rider. However, you can add more to the basic plan. 

9. Loan Collateral

   You can also use the Child Education Plan for loans. It acts as collateral in case of further financial assistance. 

Benefits of Child Education Plans

A Child Education Plan offers a variety of benefits and assistance in creating funds for the child. In a nutshell, it allows one to prepare for the future and cover almost all the significant needs of the child. 

There are a range of benefits that are provided with a Child Education Plan. Some are as follows: 

1. Future Educational Needs

   The times are drastically changing and the future requires thorough planning. A child plan in place will help one prepare for the unprecedented needs of the child in the future. The Child Education Plan will help plan for the future by covering educational expenses, talent or skill enhancement in India or abroad. However, the amount of return on the plan maturity will depend on many factors that need to be ascertained when taking the policy. 

2. Medical Coverage

   The Child Education Plan will offer coverage in all shades of life. It also acts as an emergency fund in case your child needs immediate medical attention/ hospitalization. As the parents can withdraw money, this plan helps reduce the financial burden of the family. It must be noted that only partial withdrawal is allowed in such a case. 

3. Death benefits

   Untimely demise of a parent can have a significant impact on the child. It also puts a strain on their financial stability. In this case, the plan offers to waive the premiums through its in-built rider and the cover continues. The sum assured can be taken on a lump sum or regular income basis. 

4. Loan Collateral

   Whether one plans to send their children for education in a college or university in India or a foreign country, the plan offers a loan facility. Here the policy can be used as collateral to take the loan, assisting one in getting more financial help. 

5. Riders

   Some of the plans will come in-built with the riders like waiver of premium option. However, other riders can also be added to the base policy to enhance the cover.

Types of Child Plans

Before investing, you need to ascertain two things – your preferences or needs and the types of plans you can take. There are three types in general that you must take a look at:

1. Single-Premium Child Plan

   In this Child Education Plan, you will need to pay a lump sum basis for the entire policy. In this case, you will not have to keep track of the premiums or worry about the lapse of the policy. In addition to that, you can also find various attractive discounts that you will indeed find appealing. 

2. Regular Premium Child Plan

   Regular Premium Child Plan offers you ease of investment. Compared to the Single Premium Child Plan, it offers you flexible premium options. You can either pay monthly, quarterly, half-yearly, or yearly. 

3. Child ULIP

   Child ULIP offers you an excellent choice in the investment. It offers you insurance coverage, an assured amount and a fair share in the equity market. 

List of Child Plans in India

The customers have a wide variety of child education plans in India. The insurance companies provide a diverse variety of features and coverage. For example, the minimum age requirement for Bajaj Allianz Young Assure is 18-50 years. Therefore, the plan will offer you a maximum maturity age of 6years. 

In addition to that, there is the Birla Sunlife Insurance Vision Star Plus that has an assured sum of Rs. 100,000. It offers you a maximum maturity age of 75 years. 

Some of the plans that are available in India are:

• IndiaFirst Happy India Plan
• Kotak Headstart Child Assure
• Max Life Shiksha Plus Super
• PNB MetLife College Plan
• ICICI Pru Smartkid Regular Premium
• LIC – New Children's Money Back Plan
• HDFC SL YoungStar Super Premium

Conclusion

Child Education Plans offer a sense of security and financial coverage of the future. The plan offers better coverage not just to secure the child's future expenses but also protects against inflation. These plans will ensure that the sum assured offers the child better returns in the future.