Best Child Savings Plan for Higher Education of Children
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Updated date : 05 February 2020
Best Saving Plan for Child
The cost of higher education in India is shooting up. And it requires regular planning if you want your child to be able to pursue the career path he wants.
Taking the case of the premier B-schools- the fees charged by them (IIM-Ahmedabad) rose to 400% in 2018 from 2007 to Rs. 19.5 lakh for their two-year course. And if it growing at a rate of 20% on an average every year then it will easily cost around Rs. 95 lakhs by 2025. Well, the figures are startlingly high!
And the same is the case with undergraduate courses. The Indian Institute of Technology (IIT) raised its annual tuition fee for engineering courses from Rs. 90,000 to Rs. 2 lakhs per annum, increasing the overall cost of the course. Taking an average inflation rate of 10%, the fee is likely to touch Rs. 17 lakhs in 7 to 8 years of time as to what it is today i.e. Rs. 8 lakhs. And by 2030, the same would cost around Rs. 30 lakhs. And that is why it is imperative to plan it in advance to ensure that your child has sufficient funds for college.
And for medical and engineering aspirants the costs get higher starting from the high school and not to forget the coaching institutes that can easily charge anywhere from Rs. 80,000 to Rs. 1 lakh in a year for entrance exam preparation. And all those parents who have been planning to save for their child’s education such a sharp spike in fees is no less than a wakeup call. But there is nothing to be stressed, all you need is some timely planning and selecting the right instrument to help your child meet his/her future goals. So, if your child is currently 4 years old you have at least 14 to 15 years in hand, you can invest in any of the best saving plan for child to accumulate such a huge sum over a period of time.
There are both short- and long-term goals of your child that you need to take care of. This article is aimed at parents who are saving for their children’s education. Basically, your investment options actually would depend on the age of your child and the number of years that you have in hand. You can consider some of the available child education plans like the SBI child plan, HDFC child plan, etc.
There are different types of child plans that offer life insurance cover and market-linked returns. You can select single premium child plans, regular premium child plans, child ULIP Plans, and traditional child endowment plans. It helps your child meet the educational expenses in case of your untimely demise and also there are plans that offer a fixed amount once the child attains a certain age.
Check out how you can save with a child education plan for your child's future needs. You can consider any of the below mentioned best saving plan for child to have sufficient corpus for your child’s secured future:
SBI Life Smart Champ Insurance
With this traditional plan you can secure your child’s future educational needs. The annual premium is Rs. 6000 onwards and it comes with premium waiver benefit in case of an eventuality. Also, the payouts are based on the age of the insured child. Below are some of the benefits of this SBI child plan:
- The plan provides a lump sum amount to cover financial challenges in case of an unforeseen circumstance.
- Also, the child will receive the insured amount without the burden of paying the premium
- You can choose to pay one time premium or lump sum premium
- In case of survival, the child will receive smart benefits at the end of the year upon reaching the age of 18, 19, 20 and 21 years.
Age of Child
25 % of Basic SI + 25% of Vested Bonus
25 % of Basic SI + 25% of Vested Bonus + Terminal Bonus, if any
SBI Life Smart Scholar
This is one of the best SBI child plans for those who are looking at market-linked returns and the security of life insurance cover for your child. In this SBI child plan, you can choose to pay a limited premium for your child aged between 0 to 17 years and the policy benefit will continue till your child becomes an adult.
The lump sum amount is paid at maturity and in case of an eventuality the premium is waived off. As this is a Unit linked it gives you choice of 9 funds options to choose from and also allows partial withdrawals from the sixth year of the policy to meet unexpected expenses.
- The maturity benefit is paid to the beneficiary in a lump sum on completion of the policy term and that amount can be used for a child’s higher education,
- The insurer pays the lump sum benefit either the sum assured or 105% of the premium up to the date of death to help you child continue with the studies ( the value that is higher)
HDFC Life Click to Health Plan
It is a type of ULIP plan that pays the fund value on the completion of the policy period. The minimum policy term is 10 years and the maximum is 40 years. There are three plan options - Invest Plus for wealth creation, the Premium Waiver option where the insurer pays the future premium in case of death of the proposer (the person paying the premium) and golden years benefit option that offers life coverage till 99 years of age.
You can benefit from market returns and the life insurance cover. Moreover, it allows 10 free switches among 10 funds and lets you benefit with rupee cost averaging. In case of the death benefit, the life insured gets 105% of the premium paid or total sum assured after deducting the partial withdrawals.
Bajaj Life Future Gain
It is a Unit-linked Endowment Plan that offers maximum premium allocation to ensure that your child enjoys a secured future. It gives you choices among 7 funds, and the option to change the premium payment frequency. Moreover, it also offers a partial withdrawal option. You can also enhance the coverage with rider benefits.
ICICI Pru Smart Kid Plan
It is a unit linked plan that helps you build the desired corpus for your child. It comes with a premium waiver option, free switching options and the option to choose premium payment frequency Regular pay- monthly, annually, and semi-annually and also single pay premium.
Mentioned above were some of the most appropriate child plan options. You can choose from any of the above listed plans and even more plan that works for you and helps you fulfill your dreams that you have for your child’s higher education.
Over to you
As you can see you can plan for your child education and secured future with an adequate child education plan. You can diversify your investments across different financial instruments to ensure in case one outperforms you can benefit from the other one.
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