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In today’s world, a Child plan is essential to meet the needs of providing your child with a good education. You need to make sure that you have invested in a proper plan that will be able to support all of the needs of your child throughout their growth.
With the rising costs of higher education, parents need to plan for their child’s education early on. A recent study found that 70% of parents of school-aged children feel the costs of higher education are on the rise.
Investing in your child’s education is a necessary step towards ensuring that they can pursue the opportunities that will help them live a happy and fulfilling life. To be able to provide for your children’s education, you need to invest in an education plan for them.
Features of a child education plan
If you’re buying a child education plan, you should know that you can pay the premiums in lump-sum or installments for a specified term. You can also pay a premium for child education plans using a monthly, quarterly, half-yearly, or annual plan. The number of premiums changes with the sum assured and the expected returns.
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High Sum Assured and Extended Tenure
A child education plan is a life insurance policy, which will deliver a high lump sum amount to your family, in case of your death. The cover can be taken by your family in case of your untimely demise within the policy tenure. At least ten times your annual income must be insured for it to be enough for your family’s future. The policy tenure of a child education plan can usually vary between 5 years and 30 years. It can start as soon as you have your child and go until a specific age.
The most important feature of a child’s education plan is the maturity amount. A child education plan is purchased with a specific goal in mind, and the maturity amount helps you determine whether it will be enough to support your child’s future requirements. When choosing how long to invest your money, consider inflation and interest rates to be sure you’ll have enough to support your child when the time comes.
The majority of the money from your policy is invested in market-linked assets. As the policyholder, you have the flexibility to choose between different fund options with different rates of return. You have the option of investing further into a riskier debt fund, or a safer money market one.
In addition, child education plans also provide an opportunity for you to make use of the additional rider options. Some of these rider options include waiver riders, critical illnesses, and accidental death riders. A variety of optional add-ons can be added to education plans to make them more customized for your child.
Importance of Child Education Plans
By investing in a child plan, you can easily save money every passing month, and keep a portion of it separated for the bright future for your child. It allows you to develop a behavioral pattern that encourages you to make consistent savings with time.
As soon as you have enough savings, you can start planning for your child’s future. It is a way to be sure that your hard-earned money is not being spent irresponsibly. The disciplined savings involved will help you provide for your kids.
In addition to this, most of these types of insurance require you to make monthly payments for a set number of years. If you miss a payment, the insurance company can cancel your policy, which allows you to build a consistent savings habit.
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Facilitate Your Retirement
Primarily, you should prepare for your child’s need to fund his or her college education. However, if you can manage a child education savings plan, you’ll also be able to prepare your savings for retirement.
If you’re a parent who prefers having a child later in your life, you might be retired by the time your child starts attending college. Moreover, in your post-working days, accumulating a large amount of money for college fees can be a challenging task.
You should start saving for your children’s education as early as possible because, by the time you retire, you will be more likely to have accumulated enough money to afford the cost of increasingly higher education. Even if you don’t have children as of now, you still benefit from investing in a child plan.
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Designed for Specific Purpose
Many different financial plans in India offer you good returns on your investments. Although these plans are usually designed for a broader purpose, child education plans typically allow parents to use the funds for their child’s education.
If something happens and you’re unable to continue paying your premiums, these plans will discontinue collecting their payments and the death benefit will be paid. Certain boosters also allow you to grow your corpus to a great extent.
The advantage of a child plan is that it’s better designed to handle the costs associated with education and future security of your child, and so it’s more efficient than other financial instruments. Unlike other plans, they’re structured in a way that serves their purpose better.
Final Words
Taking care of a kid can be both a scary and exciting time for any parent. One thing that is constantly on the parents’ mind, however, is what will become of their child if they’re not around anymore. Every parent must have a child education plan to ensure that they go to the best schools where their talents can be nurtured and provide them with a bright future. These are just some of the things you need to consider when putting together your child’s education plan. Consider using a child plan calculator to determine your required needs.
