Categorized | Child Insurance

child plan for children education

Getting good education for children is what most parents worry about. Affordability is one of the main concerns. By the time your child is ready for higher education, with the way education cost is escalating, it is bound to put a financial strain on you. It is important to plan for this unavoidable future expenditure to get through this highly demanding time smoothly otherwise you will either have to take a hefty loan or exhaust all your savings. Child plans offered by insurance company are very beneficial in such cases. They allow the money to grow and offer Risk cover as well.
 
There are certain parameters that make a child Policy very important mode for education planning.

1.If you have a final amount in mind, Premium can be calculated for regular investment in the plan. Longer the duration you have, lower will be the premium and better will be the returns. This is rather simple to understand. If you have more time at hand, for a given return, premium will be lesser than if you have just a few years to reach your desired corpus.

2.You invest systematically at regular intervals to generate a big corpus. This way you do not feel the pinch of large amount going out of your pocket suddenly and yet are able to save the desired amount, the reason that such plans are called savings plan.

3.Payer benefit attached to the policy ensures that even if something happens to you, the policy will continue and the child will get the promised Maturity amount at planned date. The remaining premiums if any are waived off. So when buying a child policy for education you are Assured that whatever may happen, your child will not be deprived of good education for lack of finances.

4.Child plan savings are tax free. Being a life insurance policy, premium you pay gets you Tax Benefit and even the maturity amount is not liable for any taxes.

5.Further, the maturity date of the insurance policy is when the child reaches the age of 18years 21years or 24years as per your requirement or as offered by the insurance company.

These features remaining constant one can choose between and endowment child plan or a ULIP child plan.
 
1.Endowment child policies are traditional investment plans designed for child’s education requirements. You are assured of a certain amount at the time of the plan maturity these include guaranteed returns and guaranteed bonuses. Besides these, the insurance companies announce bonuses from time to time depending upon the company performance also added to the maturity amount.

2.ULIP Child plans are unit linked plans designed to meet child education purposes. These are market linked plans. The returns are based on market and fund performance during the invested period. There are no guaranteed returns in this case but a fixed Sum Assured in case something happens to the payer or the guardian.
 
Being a Traditional Plan endowment plans are risk free and most suitable for those with low risk profiles or those who do not wish to take risks for child education finances. On the contrary, in a ULIP, the investment risk lies with the policy holder. This is suitable only for those who actively monitor the fund performance and switch the funds at the right times. Risks are generally high.  Whichever option you go in for, child education plans are ideal for managing higher education expenses. You can even compare various available child plans online at the aggregator websites and buy the most suitable plan.