Your child’s education plan allows for systematic savings to help parents realize their child’s plans for the future. This provides your child with a safe way to pursue his or her dreams, even if his or her parents aren’t around.
Some insurers offer child education plans that can alleviate parents’ anxiety as they lose substantial savings. No parent wants to refuse to help their children achieve their dreams by taking advantage of the best opportunities that a good education offers. And investing in your child’s education plan right from the start ensures that they don’t have to.
What is a child education insurance plan?
As the cost of higher education increases every year, every parent dreams of giving them the best. A child’s education and marriage require a lot of systematic planning. Because these are plans based on common goals, a certain amount of money must be specified each month.
To get good funds for your child’s education or higher education, you need to make the right plan. Find advantageous blended investment vehicles and pay off the right amount at the right time.
Children’s education plans will give children the opportunity to imagine and dream big. Most programs allow young people to pay as much as they need. This allows young people to think carefully about their alternatives before aiming for stardom. Planning for children’s education protects children’s futures and allows them to plan for the future without being limited by insufficient financial resources. A guaranteed education plan allows you to choose a flexible payment period based on your child’s stage of development. Child education plans help parents systematically raise money to meet their child’s future aspirations.
Type of Child Education Plan.
Child plans can be divided into two categories based on the type of payment offered. These are:
ULIP Child Plan.
This child education plan offers a lump sum payment at the end of the policy period. The funds from these plans can be used for any purpose, but the main purpose is to cover the cost of the higher education of the child who purchased the plan.
Children’s ULIP invests in equity and debt securities similar to other unit-linked insurance plans (ULIPs). Children’s Education Plan The only difference between a ULIP and other ULIPs is the term of office provided. A standard ULIP is provided with a policy term of 10 to 25 years, but the ULIP child education plan payment occurs when the child turns 18.
Child Endowment Plan.
This type of child education plan provides life insurance and income coverage. These plans usually have four payments equal to 25% of the guaranteed amount and bonuses that apply from age 18. This type of sub-policy is guaranteed to pay off and is therefore low risk. However, the income provided by these plans is often relatively low.
This is a feature of the children’s education insurance system.
- Bundled Compensation.
Some of your child’s insurance policies provide a lump sum benefit to your child if he or she dies during the insurance period.
- waive premiums.
Insurance premiums are paid by the company, so you will not be responsible for your child. Therefore, the policy is left to survive.
- partial waiver.
Funds can be protected throughout the period in the form of a partial withdrawal depending on the limitations. This will take care of your child’s various educational achievements.
- Tax credits.
These rules extend the tax benefit to the policyholder under Section 80C of the Income Tax Act.
- Increased loyalty and increased wealth.
These plans can also extend the benefits of increased loyalty and increased wealth to help you increase your money at no extra cost.
Limitations of child education plan.
At first glance, child education plans seem to offer not only tax benefits, but also key benefits such as life insurance and capital gains in one package. However, if you take a closer look, there are a number of limitations you should consider before choosing this type of policy.
Ensure a low life expectancy.
Life insurance offered by children’s plans is limited to 10 times the annual premium you must pay for the plan. Thus, at an annual premium of Rs. 50,000, the life insurance provided by the children’s education plan would be only Rs. 5 lakhs. This limited life insurance is almost equivalent to no life insurance at all, and term insurance offers a much higher level of coverage for less money.
Switch premium payments.
Not all premiums paid for children’s education plans are actually invested. This is because part of the premium is allocated to the insured’s life insurance. Because the amount invested is less than the premium actually paid, and various fees are deducted from the premium, the potential payment for the child’s education plan is reduced.
There are fewer investment items to choose from.
When selecting a children’s life insurance policy, insurers have limited options as to where their money is invested. Investment choices are limited by the small amount of funds available from insurance companies. Moreover, in the case of children’s fund plans, it is the insurer, not the policyholder, who determines the asset rating for which investments will be made. This limits policyholders’ choices as to how and by what means investments will be made.