How to choose the Best Child Education Plan?
Table of Content
Personality development is not just important for adults, it’s as critical for children, maybe more so. A sense of character at a young age harbours a similar streak in adulthood. Conversely undesirable personality traits in childhood are extremely difficult to reverse after the formative period.
How to choose the best child education plan?
There are a large number of child insurance plans in the market, so parents do not have it easy when it comes to selecting the best child education plan.
Selecting an ideal child education plan is critical for the long term development of the child’s future. Given the competition for degrees and the spiraling cost of education, there is pressure on both parents and children when it comes to higher education - pressure on children to perform and on parents to provide adequate finances for the degree.
Invest in plans that offer premium waiver benefit
Most child plans offer premium waiver benefit – either as an option or as an essential feature of the primary plan. The premium waiver is particularly important as in case of the death of the parent, the insurer waives off future premiums while continuing to fund the life insurance policy till maturity. This makes sure that the maturity benefit that was set for a certain age remains intact as planned, in addition to the death benefit paid.
If you have the risk appetite then go for equity-linked plans
If you have appetite for equities and a considerable investment time frame (at least ten years), you can consider opting for unit-linked child plans. It is established that over longer time frames equities give the best returns and parents must make the most of the opportunity. Ideally, the child plan must offer a balanced mix of growth and debt funds along with risk cover. Also, choose a child insurance plan that has the system transfer option to make sure your gains in the investment are protected.
If you do not have the risk appetite, go for simple endowment plans
If you have a lower appetite for market uncertainties and have an investment time frame of less than ten years, then equity-linked plans are not for you. Go for endowment plans instead. Although you won’t accumulate as much vis-a-visa child ULIP plan, but you will be adequately covered against market uncertainties.
Benefits of Child Plans
We’re sure that your topmost priority is securing your child’s future. Apart from helping you do this, child plans offer a wide variety of other benefits such as:
Securing Their Dreams
These policies allow you to save up a lump sum amount that your child can then use to follow their heart’s desire. If your child would like to go abroad for their education or start their own business, this money could help them do precisely that. Every good child plan will help secure your child’s dream financially.
Financial Stability
One of the major benefits of these plans is that they will provide your child with financial stability in case something were to happen to you. Although nothing will ever replace you or make up for your loss, your child will still have the ability to continue their education or fulfil their dreams thanks to the payout from the plan.
Maturity Benefit
If you purchase a plan when your child is very young, it’s likely they will receive the maturity benefit just when they’re ready to head to college. Given the rise in education costs, this has become all the more important today. By investing in a child plan, you can help secure your child’s college expenses.
Additional Riders
Many child plans come with additional benefits, such as a waiver of premium or personal accident insurance riders. These add-ons provide additional cover, over and above what is already offered in a regular policy. These riders provide peace of mind and additional support and security for your little one.
Partial Withdrawals
Certain plans allow you to make partial withdrawals against the corpus you’ve built up over the years. This allows you to deal with financial emergencies. You can use the withdrawal from the plan to help pay for any special course that your child wants to take up.
Income Tax Benefits
The premium that you pay towards the upkeep of a child plan is exempt from taxes under Section 80C of the Income Tax Act 1961. You can claim deductions up to INR 1,50,000 per year against the premium amount. Additionally, the payout from this plan is also tax-free under Section 10(10D) of the Income Tax Act.
How Child Plans Work
Child plans were created for the sole purpose of helping your child fulfil all their dreams. To start the process, you must decide whether you’d like to purchase a Unit-Linked Insurance Plan (ULIP) or an Endowment Plan. A ULIP will provide you with the opportunity to choose where you’d like your money to be invested. On the other hand, if you opt for an endowment plan, the insurance provider will simply invest the amount in debt instruments.
While purchasing the policy, you also need to clearly state whether you’d like a lump sum payment or regular, monthly or annual payments. Once you sort out the details and pay the premium, the child plan will come into effect.
Now, let’s assume that you are the policyholder and you meet with a fatal accident. All future premiums will be waived off and the policy provider will pay your child a part of the maturity amount every year until the plan matures. On maturity, your child will receive the lump sum amount as promised.
Similar Articles
- Child Education Plans and Insurance Policies
- Why Do I Need Child Insurance Plans?
- How To Plan Right For Your Child’s Future
- A Comprehensive Guide to Planning for Your Child's Education
- How to calculate the insurance required for your child's future
- 5 Parenting Hacks Your Child Secretly Wants You to Master
Term Plan Articles
Investment Articles
Savings Articles
Life Insurance Articles
Tax Articles
Retirement Articles
ULIP Articles
Subscribe to get the latest articles directly in your inbox
Health Plans Articles
Child Plans Articles
Popular Calculators
Here's all you should know about life insurance.
We help you to make informed insurance decisions for a lifetime.
HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
Popular Searches
- Term Insurance Calculator
- Investment Plans
- Investment Calculator
- Investment for Beginners
- Best Short Term Investments
- Best Long Term Investments
- 5 year Investment Plan
- savings plan
- ulip plan
- retirement plans
- health plans
- child insurance plans
- group insurance plans
- income tax calculator
- bmi calculator
- compound interest calculator
- income tax slab
- Income Tax Return
- what is term insurance
- Ulip vs SIP
- tax planning for salaried employees
- HRA Calculator
- Annuity From NPS
- Retirement Calculator
- Pension Calculator
- nps vs ppf
- short term investment plans
- safest investment options
- one time investment plans
- types of investments
- best investment options
- best investment options in India
- Term Insurance for Housewife
- Money Back Policy
- 1 Crore Term Insurance
- life Insurance policy
- NPS Calculator
- Savings Calculator
- life Insurance
- Gratuity Calculator
- Zero Cost Term Insurance
- critical illness insurance
- itc claim
- deductions under 80C
- section 80d
- Whole Life Insurance
- benefits of term insurance
- types of life insurance
- types of term insurance
- Benefits of Life Insurance
- Endowment Policy
- Term Insurance for NRI
- Term Insurance for Women
- Term Insurance for Self Employed
- Benefits of Health Insurance
- Health Insurance for Senior Citizens
- Health Insurance for NRI
- Best Term Insurance Plan for 1 Crore
- personal accident insurance
- Annuity Calculator
- term insurance plans
- child investment plan