What does your child want to be when s/he grows up? If your child is 3 to 5 years old, be rest assured to hear these answers – I want to be a Superhero or a Princess. But when they grow up, they would probably want to be an astronaut or a scientist. Have you ever wondered what this would cost? Have you thought about the ways to investing for your Childs Future? In this day and age, the best gift that you can ever give your child for his/her bright future is good education! And if you are not adequately geared to meet this challenge, your kid could well miss the bus on a good degree regardless of his/her talent and aptitude. The good news is ‘Investing in Child Insurance Plans’ can act as that helping hand to meet the future financial needs of your child.
With the rising cost of education each day, it has become vital to go for an investment plan for child in order to meet the expenses at critical milestones in your child’s life.
What are Child Insurance Plans?
Child Insurance Plans are a combination of investment and insurance that ensure a secured future for your kid. Moreover, these plans provide maturity benefits to take care of your child’s future needs even in your absence. Meaning, they offer comprehensive benefits at maturity along with life cover protection. Put simply; child plans prove to be a vital tool to help you plan your child’s future and give wings to their dreams
While deciding to invest in a child plan ensure that you make smart choices. It is essential that you know the answers to the following questions:
1. What Would be the Amount Required for my Child’s Education?
This should be the foremost thing that you know before you invest in a child insurance plan. The right amount for your kid’s education can be estimated by inflating the current cost of education for the defined period.
For instance, consider that your child wishes to pursue an MBA degree from a reputed university. The minimum expense for the same is around Rs. 10 lakhs today. So, 10 years from now, when your child is about to pursue his/her MBA, the cost of this degree would nearly bloat to Rs. 25 lakhs, considering 10 percent education inflation.
Thus, to be able to provide your children with proper resources and give them the liberty to choose their favourite course, you need to estimate the amount required for the same few years from now and accordingly make investments.
2. When will my Child require the Said Funds?
The key education milestone of your child’s life begins when s/he seeks higher studies, i.e. after they complete their 12th. At that point, your child is likely to be 17 or 18 years old. Therefore, planning your investment period linked to the age of your child is a wise thing to do.
Benefits of Child Insurance Plans
1. Maturity benefits to meet Higher Education Expenses
Most parents wish their child to be a doctor, lawyer, engineer or an architect. However, the fees for these professional degrees are increasingly becoming unaffordable, requiring parents to dip into their hard-earned savings or avail a loan for the same.
However, if you smartly invest in a child education plan, especially from the start, the maturity benefits accumulated will be enough to meet the overblown college fees.
2. Partial Withdrawals to Enhance your Child’s Capacity
If your kid possesses a special talent, such as dancing, singing or playing an instrument, you can further nurture it by making partial withdrawals from the child plan.
Child education plans allow partial withdrawals at key milestones in your child’s life and thus, prove to be useful to meet the expenses incurred while enhancing your kid’s talent.
3. Provision for Premium Waiver
Child Insurance Plans ensure that education of the child remains uninterrupted even after the demise of the parent. A good child plan not only offers a lump sum payment on the death of the insured parent but also waives off all the future premiums.
Reputable insurers like Max Life Insurance continue investing on behalf of the policyholder and ensure that the policy does not end after the parent’s demise.
4. Tax Benefits
Buying child education plans not only secures your child’s future but also enable you to save on taxes. Investment plans for child offer tax deductions on the annual premium paid under section 80C (up to 1.5 lakhs) and also the maturity benefits are entirely tax-free under section 10(10D). This helps to lower your taxable income.
5. Choose what’s best for your Child!
While Investing for your Childs future, it is essential to bear in mind certain factors like your budget, maturity dates, benefits offered by the plan and so forth. Additionally, it is also vital that you educate yourself with the myths about child insurance plan and steer clear of them.
Finally, ensure that you Investing for your Childs regularly and monitor your investments to help achieve the financial goals of your child.
