Benefits of a Child Education Plan
- DetailsWritten by PolicyBazaar -
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Updated date : 16 December 2019
A child education plan is a combination of investment and insurance. You can opt for the best saving plan for the child and secure your child’s career and future in a planned manner. A child education plan is a safety net that would make your child feel as safe as it is in your arms. It will help them focus on their career without worrying about finances even in your absence. The returns would be sufficient enough to help your child meet his future needs even when you are not around.
There is really no better gift than financial security to your child apart from love. To help you understand better below are some the benefits of buying a child education plan:
Fulfilling Your Child’s Dreams
If you start investing in a child education plan now, the fees will be much higher when your child actually plans to take up the course. But with a child education plan, you don’t need to worry about what course your child will pursue. Depending on his interest and skills he can take up any course as per choice. He would be able to fulfill his dreams and career goals with the sum insured that is provided by the child education policy.
So, if you start investing wisely now, the accumulated corpus at the time of maturity will be sufficient to pay for the exorbitant college fees.
The child will get the maturity benefits at the end of the policy term to ensure that the dreams are turned into reality. You can choose from a number of child education plans like SBI child plan.
Protection In Case of Unforeseen Circumstances
Once of the major benefits is financial cover to the child in case of the death of a parent. The insured child gets at least 100% of sum insured amount. The policy continues to work towards providing for higher education expenses, as the maturity amount is approximately 10 times the cost of premium.
Maturity Benefit to Meet College Expenses
As you can see the cost of education is soaring at 10% which is much higher than the economic inflation. The cost of a B.tech course has been hiked to Rs. 2 lakhs from Rs. 90,000. Therefore, it is no less than a necessity to invest in a child saving plan that would offer sufficient funds to help your child meet all the key educational milestones in his life.
Options to Choose Add-ons/ Riders
Even when you have bought the best saving plan for a child it is advisable that you enhance it further with rider benefits. You can choose a child plan that offers a waiver of premium that you have paid during the policy term in case anything untoward happens to the policyholder. There are other rider benefits like personal accident insurance rider benefit to cover up for severe accidental injuries and accidental deaths.
Permits Partial Withdrawals
You can withdraw money during the policy term to fund a special course that your child wants to take up like learning an instrument or acting etc. There are certain plans that offer periodic pay-outs to help you pay for the expenses incurred while enhancing the talent that your child possesses.
Fund Your Child's School Fees
In case the parent who has purchased the child education plan dies, then the insurance company immediately pays a percentage of the sum assured immediately, and a certain percentage is paid annually until the end of the policy term. The amount paid is sufficient to pay off your child's school fees even in your absence.
Avoid Loss of Capital
Due to market fluctuations, even your investment returns can vary. To make the most of the amount invested and save it from capital loss, dynamic fund allocation strategy needs to be adopted. You can also opt for Systematic Transfer Plan or STP and fund selection to plan your investments as per the returns that are expected and the amount that will help meet the different milestones. With STP, you can switch to a different fund unit when the market is volatile.
Avail Income Tax Benefits
The premium paid on child education plan is eligible for tax deduction under Section 80 C, up to a limit of Rs. 1.5 lakh in a year. You can also avail of tax benefits on the maturity amount under Section 10(10D).
So, there were the key benefits that a child education plan can offer apart from being a great investment scheme. Don’t you feel like securing your child's future today by investing in one of the best saving plan today?
It is crucial to arrange funds for your child’s education much in advance. A child education plan can help you to be financially prepared for any challenge that can otherwise ruin your child’s career. You can start by paying a small amount of premium now and be future-ready.
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