Education using a child insurance policy

Photo of author

By RobertBass

It is a Japanese proverb that says, “It takes two to bring them into the world, but it takes a whole village for one to raise one.” This proverb sums up the work required to make children stand out in the world. You want your children to be successful in education.

This dream is now difficult due to the rising cost education in India. Because of rising education inflation, a management degree from IIM Ahmedabad will cost Rs 21 lakhs. It is expected that it will rise to Rs 95 lakhs in 2025. In the same way, an engineering course costing Rs 8-10 lakhs will likely increase to Rs 17-20 lakhs over the next eight years.

Parents are having difficulty paying for education, whether it is primary, secondary, or higher education.

The Solution

You need to have a solid plan to protect against rising inflation in order for your child to fund their higher education. A great way to do this is by buying a great ULIP India child plan that provides adequate features for investment and insurance in a single vehicle. This is how you can help your child achieve their higher education goals.

  1. Maturity Benefit: To cover the college expenses of your child

No matter what career your child chooses, whether it is an engineer, architect, lawyer, doctor, or engineer, the adequate ULIP India child plan will cover the education costs. You only need to start investing in this plan early and let your portfolio grow and accumulate a large amount when you reach maturity. This money will pay for your child’s higher education, but it can also be used to help your child achieve his goals such as a marriage or start a business.

  1. In your absence, support for your child’s education costs

In the event of your death, the insurance company will pay a percentage of the sum assured immediately. Annual payouts are made each year up to the end of the policy term. These payouts will pay for your child’s school expenses in your absence.

  1. Partial Withdrawals: Enhance your child’s talent by allowing them to withdraw from certain parts of the equation

Child plans do not only cover higher education costs. You can also take partial withdrawals from these plans to help your child develop his talents. You can make partial withdrawals from your child’s insurance plan if your child has a special talent, such as singing or instrument playing, or if he needs money to improve his skills (such learning a programming language).

Additional features of child insurance policies

Life Insurance: This insurance cover is available to children who have the insurance protection portion of their child plan. It can be chosen based on your financial needs and capabilities.

Waiver of premium: The policyholder’s death does not mean that the policy will end. However, the nominee receives a lump-sum benefit. The future premiums are waived and the insurance companies continue to invest the money for the policyholder.

Must Read:

Tax Benefits: Child Insurance Plans offer both protection and returns, as well as tax exemptions under sections 80C (life insurance), and 80D (critical illness riders).

Your risk profile is a key factor in deciding whether to invest in a child insurance plan.

There are many options for child insurance plans that allow you to invest in a variety of funds. These funds can be classified into high-risk, medium-risk, or low-risk categories.

  1. Are you looking for rapid growth?

Equity is a great option if you want to invest long-term and get decent returns. Equity is safer than debt, but it is not the best option to beat rising inflation.

  1. Are you willing to take moderate risks?

Balanced funds are for those who can take some risk but still want stability and balance in their portfolio (equity and debt). If you prefer to be safe, then debt funds might be right for you.

There are many options for switching.

  • ULIPs offer a range of options for managing your market fluctuations. One such option is the fund switching option.
  • If you see a decline in the stock market you might switch some of your funds to liquid/debt funds. Once the market recovers, you can convert it to equity and leverage the upswing.
  • You can also move a portion of your investment to liquid funds or debt when you reach a milestone in your life, such as a child’s education or marriage. This will make sure that your large investment portfolio is safe and can provide good returns when it matures.
  • It is important that you perform the fund switching exercise according to your risk profile, financial goals, and market volatility.