Benefits of a Child Education Plan

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.

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.

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.

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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.