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The best gift parent(s) can give their children is quality education. Consequently, everyone saves for their child’s education costs, regardless of their income level. While some parents create FDs for their child’s education, others may open a separate savings account for parking education funds.
These strategies may occasionally be useful, but the maturation amount will almost always be affected by rising inflation and education costs. If you want your savings to grow over time and create a financial security net for your child’s education needs, investing in the best Child Education Plan can be your greatest decision.
When things don’t go as planned, this financial tool combines savings, insurance, and investments to ensure that your child’s education plans are unaffected.
How To Select The Best Education Plan For Your Child
The available range of child education plans can easily overwhelm any parent. Even if days of research are unable to assist you in determining “which is the best Child Education Plan in India,” you can begin your search by employing the following methods:
Choose Plans That Align With Your Child’s Education Goals
Estimate your child’s future education costs based on their age, inflation trends, and potential career interests before looking for a Child Education Plan. Choose whether you want to use this fund for international study, postgraduate study, or both.
Determining a clear and realistic goal will help you select the right plan that can accumulate the necessary funds without putting financial pressure on other aspects of.
Not all education plans provide similar payout structures. Some allow you to get periodic payments, while others may give a lump sum at the end of the policy. While periodic payments can provide financial relief during education and college, lump sum payouts are ideal for covering higher education expenses.
So, assess your expected needs and pick a plan whose payout structure matches your financial requirements.
Pick Plans Based On Your Risk Appetite
Each Child Education Plan has its own set of features and risk profiles. If you are risk-tolerant, then Unit-Linked Insurance Plans will be better for your children because they allow a part of the premium to be invested in debt funds, equity, and other financial securities.
While investments in equity are risky, they also have a potential for higher returns. Conversely, if you’re risk-averse, endowment plans will be a better choice. Market uncertainties do not affect these plans, providing you greater financial stability.
We recommend assessing each plan based on your risk profile and not just the promised benefits of a child education plan.
Look For Premium Waiver Benefits
If you’ve done enough research on ‘what is Child Education Plan’ and related aspects, you would know that a premium waiver is a must-have feature on child education plans.
Plans with a built-in premium waiver or as an additional benefit lets the insurer pay the remaining premiums if the parent(s) pass away.
In case the unfortunate demise of the policyholder happens without them paying the full premium, their children will not have to pay the pending premiums because of the premium waiver benefit. The insurer will pay it themselves till maturity.
Children can then claim full maturity benefits to fund their education. You can also add additional benefits/riders to a particular plan to make the policy more effective.
Benefits Of Child Plans
Not all child education plans are designed the same, but they all provide numerous benefits to the insured. Regardless of the child education plan you choose, you can rest assured of receiving the following benefits of a Child Education Plan.
Financial Security For Child’s Future
Investing in a child education plan ensures that your child will remain financially secure, even if something happens to you. The amount received on policy maturity can be used to fund higher education, start an entrepreneurial venture, or anything that supports their dream career.
To ensure your child’s future, always put money into the best Child Plans, like the Shriram Life Early Cash Plan.
Tax Savings
You can claim deductions of the amount paid towards the education plan’s premium, lowering your tax liability. However, you can only claim up to a maximum of ₹1.50 lakh/per annum u/s 80C.
The maturity proceeds are also tax-free u/s 10(10D). This exemption is available if the premium payment didn’t exceed 10% of the sum assured during the policy term and the premium didn’t exceed ₹2.50 lakh mark in any year.
In the unfortunate event of the policyholder’s death, the child (nominee) will continue to receive death benefits that are exempt from tax under section 80(10D).
Partial Withdrawals
The funds that policyholders have accumulated over time may be used to make partial withdrawals from some plans. It can provide instant financial relief during emergencies.
Peace Of Mind And A Sense Of Control
Some people use savings plans to pay for their children’s education. Even though these plans offer a lot of benefits, big expenses like wedding costs, big repairs to a house, or medical bills can drain the savings.
Saving for your child’s education by investing in the best child education plan will give you peace of mind and an assurance that your child’s education fund remains untouched and is only used for the designated purpose.
Secure Education Loan Against Policy
If your child’s education plan changes over time and requires a higher amount before maturity, you can secure an education loan by using the policy as collateral.
For example, the Shriram Life New Shri Vidya plan can be used to get a loan of up to 80% of the surrender value.
How Does A Child Plan Work?
‘Which is the best child education plan in India’ is probably the most pressing question many parents ask themselves. Although not all plans offer the same benefits, features, etc., they all function in the same way.
The plan comes into effect when you choose the right plan for your child’s education, fill out the required application form, upload the necessary documents, and make the first payment.
You continue making timely premiums, and the insurer invests those in equity, debt instruments, or other financial securities based on the policy type and terms.
The policy matures once your child reaches a specified age or the policy term is over. In either case, you receive the maturity proceeds that can be used for your child’s education. If the policyholder dies during the policy tenure, the child (nominee) receives full death benefits.
Secure Your Child’s Future With Shriram Life Insurance
Children’s futures are heavily influenced by their education levels and quality. So, parents must make financial arrangements for their child’s educational needs. Whether you’ve recently become a parent or your child has already started their schooling journey, it’s recommended to start saving early by investing in the best Child Education Plan. This strategic investment will ensure that your children complete their education, even if things don’t go as planned.
