ULIP Plans for Child Education

What is a ULIP Child Education Plan?

A ULIP Child Education Plan provides a policyholder with life coverage and capital investment opportunities in market-linked securities. The corpus generated through these investments can be utilized to fund the educational expenses of your child. 

To make your child financially free for pursuing studies in a field of their choice you need to understand the best child education ULIP plans. Let us learn about them in the next section.

Top 10 ULIP Plans^†† for Child Education in India 2023

Let us understand the best ULIP plans offering attractive maturity benefits to the policyholder in the following list: 

Disclaimer: †† Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is done in alphabetical order (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

How a Child Education ULIP Plan Works?

A ULIP plan for investment in child education works in the following ways:

• Choose a scheme from the above-listed top Child ULIP Plans in 2023.

• You select the insurance funds from the options offered by the insurance company.

• The insurance company will use a part of the premium for insurance coverage and investment in market-linked instruments.

• Make periodic payments in the Child Education ULIP Plan for the selected policy term.

• The policyholder/beneficiary gets lump sum or deferred payout options as a maturity benefit after the end of the policy term.

• The amount received as a maturity benefit can be used to finance your child’s education.

Features of Best ULIP Plan for Child Education

The following list will help you to understand all the features offered by the Child Education ULIP Plans:

1. Allows Partial Withdrawal

   The best ULIP Child Education Plans also allow the customers to avail of the facility of partial withdrawal after the completion of a 5-year lock-in period. One can avail of this facility to pay for other important requirements like fees for coaching classes and marriage-related expenses.

2. Provides Rider Benefits

   The Child Education ULIP plans to offer a range of rider benefits to provide additional life cover to the child. The investors can avail of the following major rider benefits that can while joining the ULIP:

   1. Accidental Death Benefit (ADB) Rider:

      Along with life insurance offered by the ULIP plan, this rider gives additional financial support to the nominee in case of the demise of the insured person in an accident. The best ULIP plans for child education offer rider benefits equal to the base sum assured.

   2. Accidental Total or Partial Disability (ATPD) Benefit Rider:

      The ULIP investment child plans also give the choice of ATPD Rider that pays the insured person a lump sum amount in case of total or partial disability caused by a fatal accident. This helps in making your dependents stress-free in meeting any urgent expenses.

   3. Critical Illness (CI) Rider Benefit:

      The diagnosis of a critical illness in the insured person can put a burden on the finances of their family. The CI rider gives the insured person a lump sum payment of the assured amount to help cover the treatment expenses. 

3. Flexibility on Choice of PT, PPT, and Premium Payment Frequency

   To meet the important financial timelines of your child’s goals, you can decide the duration of your Policy Term (PT) and Premium Payment Term (PPT). Likewise, multiple options for Premium Payment Frequency are available with the best ULIP Plans for Child Education. The policyholder can pay the premiums on a monthly, quarterly, semi-annually, annual, or lump sum basis.

4. Option to Safely Switch between Risk Portfolios

   The companies offering top ULIP child education plans allow them to freely switch between insurance funds portfolios a few times in a policy year. This helps the investors to gain higher returns by shifting from a high-to-low-risk fund profile smoothly.

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Benefits of ULIP Plans for Child Education

ULIP investment plans for child education offer attractive benefits to the policyholders. The elaborated financial net, extensive maturity benefits, and peace of mind are its significant features.

Listed below are some of the pros associated with a Child Unit Linked Insurance Plan; let us have a look:

1. Build Sufficient Corpus for Child Education

   A market-linked ULIP plan for child education builds enough corpus to fulfil all the education-related expenses of your child. The benefits you receive from the best ULIP plan vary depending on the terms and conditions stated by the company at the time of purchase.

2. Gives Higher Benefits over the Inflation Growth

   The inflation on educational expenditures grows at 10-12% yearly. The top equity-linked Child Education ULIP plans offer you higher returns in long term than the inflation growth by the time your child need those funds.

3. Financial Support for Medical Treatment

   The Child ULIP Plans are crucial investments also because they offer you a liquid amount with a partial withdrawal facility during medical emergencies.

4. Collateral to Raise Loan for Higher Education

   To raise loans for important needs the best investment plans for child education can be leveraged as collateral.

5. Tax Benefits 

   Child ULIP Plans for education offer the tax benefits mentioned in the table below:

   Sections u/ Income Tax Act (1961)	Tax Exemptions
   Section 80C	Tax exemptions on premiums paid in ULIP Plan up to Rs. 1.5 lakhs annually
   Section 80E	Tax exemption for 8 years on interest paid for education loan
   Section 10(10D)	Tax exemption on the maturity amount (except in case of death benefits) if the net premiums paid annually from all ULIP plans is up to Rs. 2.5 Lakhs (limit of Rs. 2.5 lakhs was introduced in Union Budget 2021)

Why is Buying a ULIP Plan for Child Education Necessary?

Now let us learn why a parent must buy at least one Child Education ULIP Plan through the list below:

• Provides full financial security to your child for pursuing their educational plans

• Gives the best returns for covering educational expenses in future when your child needs the funds

• Helps you cover the tuition fees if your child wants to go for higher studies

• Gives financial support to the child even after the parent’s demise

• Offers higher returns countering the fluctuating inflation prices

• Market-linked securities though come with financial risks, they offer higher returns in long term than savings plans

Points to Remember Before Buying a ULIP Child Plan

For a concerned parent choosing a plan from the range of best ULIP schemes for child education can be a tough task. 

The following list will help in easing the decision-making process for you:

1. Policy Features

   Select a ULIP plan with careful selection of the Policy Term, Premium Payment Frequency, and other policy features. They should suit your financial timelines as per the specific requirements of your family.

2. Risk Portfolio

   Choose the rider benefits, and insurance funds options catering to your needs and risk appetite.

3. Insurance Claims Settlement Possibility

   It is important to seek a high Claim Settlement Ratio (CSR) of the insurance provider.

4. Careful Allocation of Funds

   The fund coverage amount and the fund investment tenure must be decided based on the healthcare needs, career goals, wedding, and other life plans of your child.

Summing It Up

The child investment ULIP plans offer attractive features and a range of benefits. They not only secure the future of your child in your absence but also builds wealth for your child. These plans are a good investment option to secure the immediate and future financial requirements of your child. 

However, reaching a decision should be based on considering all the possible needs, circumstances, and responsibilities of your family.

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