5 Benefits of Investing in a Child Education Insurance Plan

Every parent aspires to fulfil their children’s dreams. As a parent, all you have to do is to make sure they have the support they need to pursue their goals. But you need a financial plan to ensure your child’s bright future. One of the big expenses that every parent needs to prepare for is their child’s higher education. Higher education costs are rising each passing year. You need to start planning for their education as soon as you possibly can, lest your financial constraints limit your child’s educational ambitions.  

To fulfil your child’s educational expenses, you need to invest in a child education insurance plan right away. A child education plan helps you in monetary terms and keeps your children’s dreams on track for success. 

Importance of Education 

The importance of education cannot be understated. Securing a good career, income, and a decent standard of living, all require a respectable education. Higher education is becoming highly specialized and is essentially a mandatory prerequisite to most jobs. But at the same time, the cost of higher education is also increasing year-on-year due to inflation. Hence, it is not only important to prioritize your child’s education, but it is also essential to start financially planning for higher education as soon as possible.  

What is a Child Education Plan? 

Child education plans are investment plans that specifically focus on growing your wealth for educational expenses. The primary benefactors of these plans will always be your children. Nowadays, you can also find several child education life insurance plans, that not only help with paying for your child’s education but also secure their financial future in case of your absence.  

The returns from a child education plan can be paid out in two ways. First, you can opt for regular income that assists with your child’s month-on-month education expenses. And the second is a lumpsum payout that can help you pay for large fees associated with higher education.  

Types of Child Education Plan 

ULIPs: Unit-linked insurance plans are life insurance products that combine the benefits of financial security with market-linked returns. This dual benefit allows you to secure your child’s educational expenses while also preparing for their financial security in case of your untimely death.  

Guaranteed Returns Plans: If you are risk averse and do not like the volatility of market-linked funds, you can opt for a guaranteed returns plan. Guaranteed returns plans grow at a set interest rate that is decided upon at the inception of the policy. This means that you can calculate your exact returns from day 1!  

Term Plan with Child’s Future Protect Benefit: If you want to purely focus on securing your family in your absence, you should opt for a term insurance plan. Term plans are pure life cover products that simply provide life insurance in exchange for a modest premium. Moreover, some term plans, like Edelweiss Life- Zindagi Protect Plus, offer additional child cover. This added child cover can be indispensable to secure your little one’s dreams in your absence.  

Benefits of Child Education Plan 

Pay for High Cost of Education: 

You already know how expensive it is to live and educate yourself. Education will be even more expensive in the future. From school picnics, fancy dress competitions, sports equipment to exorbitantly high tuition fees in school and colleges, you have to be ready to pay huge amounts for your child’s scholastic career. 

Get More for Less Via Regular Investments: 

By investing an amount of money regularly, your investments compound into a handsome sum in the future. This corpus will reduce the financial burden of higher education. You can also opt for plans with regular income instalments if you need a financial boost to pay for annual school or college fees. 

Avoid Loans: 

Education loans are the most common way to amass funds for higher education. If you’re a young parent, you might already be paying off your own education loan right now. There may even be a car or home loan in your life. So, you know how hectic it can be to pay off these hefty loans. Don’t let you child take up additional liabilities. A child investment plan takes away the pressure of applying for a fresh loan and allows you child to dream with constraints. 

Investment and Protection: 

A child education insurance plan provides the dual benefits of life cover and investments. Moreover, by adding a waiver of premium rider, your family will not have to pay additional premiums in case of your untimely death. Even if something were to happen to you, your child’s dreams will not have to suffer. With a robust and well-thought-out plan, your children can dream big and achieve all their goals without financial worries. 

Tax Benefits: 

You also get tax benefits with a child insurance plan. The premium is deductible under section 80(C), and the maturity amount is exempt from tax under Section 10(10D), unlike fixed deposits or equity shares, which attract a long-term capital gains tax. 

Secure Your Child’s Future, Today! 

Take the right steps at the right time; be the parent who is prepared for the future. Invest in the right child education policy to secure your child’s future, both in your presence, and even in your absence. Choose a child plan with waiver of premium to ensure that your kid’s education is unhindered even when you’re gone.  

Chirag Iyer - BFSI Enthusiast 

Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing.