Benefits of a Child Education Plan

A child education plan is a combination of investment, savings and insurance. The best savings plan for your child will help you secure their career and future in a planned manner. Along with creating a safety net for your children, a child education plan offers a life cover to compensate your family for their loss. 

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Best Child Saving Plans
  • Insurer pays your premiums in your absence

  • Invest ₹10k/month and your child gets ₹1 Cr tax free*

  • Save upto ₹46,800 in tax under Section 80(C)

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Nothing Is More Important Than Securing Your Child's Future

Invest ₹10k/month your child will get ₹1 Cr Tax Free*

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Child Education plans help children focus on their career without worrying about finances, even in the absence of a parent. The following are the benefits one can expect from a child education plan on the death of the parent –

  • Death benefit amount on the death of a parent

  • Premium waiver on the death of a parent

  • Final maturity or fund value at the end of the policy term

These death benefits together make a triple benefit child plan. The returns would be sufficient enough to help your child meet his future needs to pursue whichever field they desire.

Below are some of the benefits of buying a child education plan:

Fulfilling Your Child's Dreams

The cost of tuition will be much higher when your child actually plans to take up a course. Investing in a child education plan now will help you cover this fee in the future, irrespective of the course the child pursues. The accumulated corpus at the time of maturity will be sufficient to pay for the exorbitant college fees. He would be able to fulfill his dreams and career goals with the sum assured under the child education policy even in the absence of his parent.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Protection In Case of Unforeseen Circumstances

One of the major benefits is the financial cover to the child in case of the death of a parent. With the life cover, the child gets at least 100% of the sum assured amount. Many child plans waive off future premiums on the death of a parent but keeps the policy in force. This ensures that the policy continues to provide for higher education expenses, as the maturity amount is approximately 10 times the premium cost.

Maturity Benefit to Meet College Expenses

As you may be aware, 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. 4 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, you should enhance it further with rider benefits. You can choose a child plan that offers a waiver of the premium if anything untoward happens to the policyholder. Other rider benefits like the personal accident insurance rider benefit cover for severe accidental injuries and accidental deaths.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Permits Partial Withdrawals

During the policy term, you can withdraw money to fund a special course your child wants to take up, like learning an instrument or acting, etc. Certain plans offer periodic pay-outs to help you pay for the expenses incurred while enhancing your child's talent.

Fund Your Child's School Fees

If the parent who has purchased the child education plan dies, the insurance company immediately pays a percentage of the sum assured, and a certain percentage is paid annually until the end of the policy term. The periodic payment is sufficient to pay off your child's school fees.

Avoid Loss of Capital

Due to market fluctuations, even your investment returns can vary. A dynamic fund allocation strategy needs to be adopted to make the most of the amount invested and save it from capital loss. You can also opt for a Systematic Investment Plan or SIP to plan your investments according to expected returns. With SIP, you can switch to a different fund unit when the market is volatile. Child ULIPs can help you in this aspect.

Avail Income Tax Benefits

The premium paid on a 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.

“Tax benefit is subject to changes in tax laws. Standard T&C apply.”

Conclusion

It is crucial to arrange funds for your child's education much in advance. A child education plan can help you 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.

FAQ's

  • Q: Why should you plan for your child’s education?

    Ans: Education in India has become twice as expensive as it was a few years back. Medicine and engineering degrees are now the most expensive courses. In addition, if the child wishes to pursue his/her education abroad, you can count on a huge dip in your savings.
    Moreover, there is no guarantee that you will be around to see that your child receives the best education. On your death, you should have a plan in place that secures your child’s educational pursuits.
    A child education plan can help you offset the risks associated with the two aspects.
  • Q: How do child education plans work?

    Ans: Child education plans allow you to invest your money and get high-risk returns to grow a corpus for your child’s future. It also protects them financially from the death of the earning parent. Now, child education plans come in different formats, viz. Money-back plans, ULIPs, and endowment-based plans.
    Money-back policies offer survival benefits on surviving specific intervals within the policy term, in addition to death and maturity benefits. The periodic income through survival benefits is why such plans are highly sought after.
    ULIPs are insurance cum investment schemes, wherein the returns are based on the market conditions. A part of the premiums goes into insurance protection and the remaining can be invested in various market-linked debt and equity funds.
    Endowment-based policies are traditional plans that offer benefits of life cover and savings. Your child will receive lump-sum payouts on the maturity of the policy or on the death of the life assured. The funds can be used by them to fund their education.
  • Q: What is the right time to buy a child plan?

    Ans: The most prudent time to buy a child plan will be as soon as possible. As you are delaying the purchase, it is only costing you more money. You should know that child plans can now be bought for kids as young as 14 days old. The sooner you buy a child plan, the larger will be the corpus at the end of the policy term. Let's explain this with an example. Say that you invest a monthly sum of Rs.5,000 for 20 years. Considering a return rate of 8%, you can grow a corpus worth Rs.28,45,000. Now let's say you delayed the purchase for another 5 years. This delay can cost you an additional investment of anywhere around Rs.3 Lakhs to grow the same amount!
  • Q: Which policy is the best for child education?

    Ans: The best child education policy is one that has an investment component to it that protects against inflation. Moreover, the best policy to secure your child’s future is one that is comprehensive in terms of the assured benefits and features. Make sure that the amount you wish to assure is in line with the potential needs of your child.
  • Q: What is the most affordable child plan for girls?

    Ans: If you are somebody on a budget and have a daughter below the age of 10, you may want to consider the Sukanya Samriddhi Yojana introduced by the Government of India. A parent can start an account with a minimum deposit of Rs.250. You also earn an interest of 7.6% compounded annually.
  • Q: What are the different types of child education plans?

    Ans: Child education plans come in different formats. The most popular ones are money-back plans, ULIPs, and traditional endowment-based policies.
    Money-back child education plans offer periodic survival benefits; ULIPs offer insurance protection as well as high returns on market-linked investments; endowment policies guarantee protection on the death of the parent in addition to savings opportunities.
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Nothing is more important than securing your child's future

  • Life Cover paid to family to meet immediate expense
  • Future premiums are paid by the Insurance Company

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