Having kids is exciting, but these little bundles of joy also come with major responsibilities-mainly protecting their future both financially and emotionally. Undoubtedly, every parent wishes to provide the best for their kids, and they are even ready to go the extra mile. But unfortunately, most parents don’t realize they need a separate investment plan to secure their child’s future. These plans are called children plan for education. They provide not only protection but also savings needed to safeguard the kid's future.
Importance of Child Plan for Education
These plans offer great opportunity to ensure the security of your child’s future., However, it is also essential to understand the importance of these policies.
Protection in Case of Uncertainty (Life Cover)
A child plan for education is specially designed to cover the future needs of your children. Therefore, the nominee receives the assured sum in case of any unexpected or unfortunate situation. Moreover, the maturity amount is also approximately ten times the premium cost, which can be used to provide for child higher education.
Maturity Benefit
These plans also have a maturity benefit which can be used to fund your child's future education. As a result, a parent can choose a plan with regular payout amounts at every major educational milestone of the child’s life.
Additional Riders to Choose From
Riders add additional benefits to the policy, and there are different varieties of riders you can choose from. However, one should ensure they can afford the add-on riders as the premium cost increases.
Permission for Partial Withdrawal
One should be able to withdraw a certain amount from the plan when and if needed. Moreover, certain plans also offer periodical payouts to help the policyholder with the expenses incurred to raise the child.
Funding Child School Fees
Today, many child plans are also offering to pay for tuition classes and fees. When a parent purchases this feature, their kid’s fees can be deducted from the policy in case of any emergency, and this provides extra security to your child's dreams and future.
How to Avail Tax Deductions
The best child education plans provide not only security but also Income Tax deductions. According to section 80c of the Income Tax Act, the premiums paid under child education plan is tax deductible upto an amount of Rs. 1.5 lakhs per annum. Also, according to Section 10D the maturity amount is eligible for tax deductions. However, please note that tax laws are subject to amendments.
Importance of choosing the right Child Plan for Education
The plans play a vital role in securing the future of your kids, especially their higher education. They reduce the financial stress on a parent and offer a secure future. But choosing the right plan plays a vital role, so let’s see some important factors that should be considered before purchasing a child plan for education :
Child’s Age
In order to obtain the best child education plan, one must start early. The plans should be long term with intermediary payouts whenever necessary.
Cost of Education
Currently, analysing the cost of education plays a key role. A person can obtain approximate value in the future with the help of the current value, which makes planning easy.
Payment Frequency
There are several kinds of payment frequencies such as single payment, monthly, quarterly, half-yearly, and yearly. It is always advisable to select regular payment frequency for the kid’s education plan rather than a single payment.
Today, it has become crucial to arrange for your kid’s education in advance. While one can obtain the best child education plan by starting early, one should also consider several other factors such as inflation when purchasing a policy. So, it is always advisable to read the policy documents carefully before proceeding with the purchase.
Disclaimer:
*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.