Your child’s future is one of the aspects that you should necessarily pay attention to. Now, the question is how to choose the top plan for children’s education in the country. There are several providers and insurance companies (you may already know) that offer these plans with different features and benefits. Let’s list some of the most common aspects to include in your checklist.
Choosing the best plan for your child’s education – things to remember
These are the points you can’t miss when comparing and choosing! Planning of children’s education.
- The plan should offer the dual benefit of a reasonable amount of life insurance and savings/investment options for the policyholder. Note that not all plans explicitly offer both.
- Partial withdrawals should be available in case of emergencies or at various stages in the child’s life when educational expenses have to be paid. This feature varies widely by plan, so check your specific terms.
- This plan requires providing a lump sum (or monthly income) to the child in the event of the death of the parents. It must also remain active with a premium waiver feature, and future premium payments must be made by the insurance company. The end-of-tenure payment must be sufficient to ensure your child’s financial well-being.
- Plans for children must always be tax efficient. While the premium paid has to be deducted under Section 80C, the maturity amount also has to be exempted as per Section 10 (10D) of the Income Tax Act. Please note that these benefits are subject to the overall limitations in these sections and are subject to change based on changes in tax law.
- Unit-linked insurance plans (ULIPs) in particular require the option to choose investment options based on risk appetite, along with periodic portfolio reviews and fund changes if required.
- Look for plans with additional benefits that add to your corpus, such as loyalty rewards, bonuses, and wealth boosters. However, these benefits are not standard for all child education plans, so be sure to read the policy details carefully.
- The plan must have a reasonable cost structure in terms of fees and charges. You should compare apples-to-apples across multiple policies and explore their features side by side. It’s also important to understand the total cost over the life of your plan, including hidden fees that can impact your overall bottom line.
Complete the optimal plan for children’s education
Remember, these points will help you finalize the best policy to ensure your child’s financial security. He/she should have no problem achieving his/her educational and other aspirations whether you are around or not. That should guide your decision. At the same time, you should compare the premium amounts of your desired coverage and check what is affordable in this regard.
Start as early as possible, ideally from the time your child is born. Even if you start from the formative years (between the ages of 1 and 8), you can accumulate a considerable amount of corpus to achieve your educational and other life goals. Starting early can give you big gains because of compound interest, so starting early can allow for significant accumulations.
