With the cost of higher education growing every year, providing them the best of everything is every parent’s dream. A child’s education and marriage require a lot of systematic planning. These are ordinary goal-based plans, and hence some amount of money demands to be designated each month.
For a good education fund, or for your child’s higher education, you will need to plan something right; look for a fruitful mix of investment instruments and pay the needful amount at appropriate times.
For this you need to understand how child education insurance plans can help.
Table Of Contents
- 1 Child Education Insurance Plans: In Brief
- 2 Why do you Need a Child Education Insurance Plan?
- 3 5 Features of a Child Education Insurance Plan
- 4 1. Lump-sum compensation
- 5 2. Waiver of premium
- 6 3. Partial withdrawals
- 7 4. Tax benefits
- 8 5. Loyalty addition and wealth booster
- 9 Two Types of Child Education Insurance Plans
- 10 1. Child ULIPS
- 11 2. Child savings plans
- 12 Child Education Insurance Plans – Myth v/s Reality
Child Education Insurance Plans: In Brief
Child Education Insurance Plans concern your security and savings demands to secure your children’s future. Being a parent, one of the most important purposes would be to ensure that your children have a bright future and live their lives conveniently. These solutions can help you achieve that by saving for your children’s higher education at a prestigious university.
With a Child Education Insurance Plan, you pay premiums for a particular term (monthly, half-yearly, yearly, or single pay). Once the policy term expires, you receive a lump-sum amount called the Maturity Benefit. Suppose an unfortunate event occurs during the policy term, the company extends your nominee the life cover sum.
The company further dismisses the future premium payments for the outstanding policy term to guarantee that your children’s future is forever safe. This benefit is ready as long as all due premiums are paid.
Also Read – Insurance Meaning
Why do you Need a Child Education Insurance Plan?
A Child Education Insurance Plan is essentially a life insurance policy that extends protection and a platform for saving money to guarantee a protected future for your child.
It ensures that your child pursue the education they want with a lump-sum payout at maturity or when an unfavorable situation arises.
It serves as a security net to guarantee that your child’s education does not get afflicted even if you are not around. In case of an unfavorable situation, your child will have the life cover.
Here are a few more reasons to invest in a child insurance plan.
5 Features of a Child Education Insurance Plan
Generally, Child education Insurance Plans offers the following features:
1. Lump-sum compensation
Some of the child insurance plans provide your children with a lump-sum gain in case of your demise within the policy term.
2. Waiver of premium
Your child won’t be troubled with premium amounts as the company handles it on your account. Hence, the policy remains to survive.
3. Partial withdrawals
You can obtain your funds throughout the term in the form of partial removals, subordinate to limitations. This takes care of your child’s various educational breakthroughs.
4. Tax benefits
Such a policy extends tax gains to the policyholder under section 80C of the Income Tax Act.
5. Loyalty addition and wealth booster
These plans may also extend loyalty addition and wealth booster advantages to assist you in growing your money without requiring you to spend extra money.
Two Types of Child Education Insurance Plans
There are various child insurance plans available in India. Buying the best child plan will help you in achieving the financial milestones that you have set for your children. To help you out, we have listed below two types of child insurance plans that are available:
1. Child ULIPS
A ULIP or Unit Linked Life Insurance Plan is an insurance policy that multiplies up as an investment. A portion of your money proceeds towards guarding your child, exactly like the regular child education insurance plan. The outstanding amount is funded in a mix of equity and debt.
Learn how to save for your child’s future by investing in a ULIP plan.
2. Child savings plans
Child Saving Plan enables the policyholder to fund in the plan externally any market uncertainty. It is a multi-faceted plan that offers life cover, maturity gains, and tax benefits, all in a single policy.
Child Education Insurance Plans – Myth v/s Reality
Myth 1: Child Education Insurance Plans cover a child’s life. It is unpropitious to purchase insurance in the name of a child.
Reality 1: Many child education insurance plans guarantee the life of the earning parent and not the child. The advantage connected with child plans is that the child’s future goals of seeking higher education are accomplished in case of the unfortunate demise of the parent.
Myth 2: Child Plan terminates if / when the parent dies.
Reality: The advantage of child education plans is that ordinarily, they offer a waiver of premium option, which the nominee can receive in an unfortunate death of the parent, the future owed premiums are waived off, and the policy continues. There is no influence on the gains due to being collected at maturity of the child plan.
Myth 3: The child insurance plan is fitting only for satisfying the education expenses for the child.
Reality: Child education plans are intended to take charge of the enormous expense of education for your child. Nevertheless, there is no constraint on utilizing the amounts obtained at periodic interludes throughout the policy term and maturity.
Example – If you funded a child’s education plan for higher education, your child decides not to proceed with additional education and utilize the funds instead for other responsibilities. They may do such irrespective of the primary object it was designed for.
Myth 4: The Child Insurance Policy bars investment for a prolonged period.
Reality: Most utmost online Child Insurance Plans are adjustable when it appears to Policy Terms. The policy term of most excellent market-linked child plans ordinarily varies among 5 to 25 years. This suggests the earning parent can withdraw funds, both partly and entirely if wanted quicker than thought.
Choosing the best child education insurance plan is a wise decision you should make to ensure your child’s safe and secure future, however from so many plans to choose from, it is pretty obvious for a person to feel confused this is where Canara HSBC Life Insurance comes to your aid. Providing the best Child Insurance Plans with exceptional benefits, we have indeed got you covered!
Plan your child’s future today!