In today’s modern world, education is one of the most expensive and important areas of life, receiving financial assistance to pay for. And the moment you begot a child, education for that child is inevitable. Child education plans allow you to budget the costs associated with raising a child specifically focusing on his/her educational expenses.
As these plans are multipurpose, they provide a number of unique benefits, such as the integration of particular riders and the addition of life insurance. You can also choose to take partial withdrawals to manage your child’s current finances.
Benefits of a Child Education Plan:
- Child’s Future is Secured
- Enjoy Tax Benefits*
- Multiple Asset Options
- Automated Portfolio Management
- Bonus Additions
- In the tragic case of your death, your child will be provided with comprehensive protection
- Payout of the desired amount is guaranteed
- Options for receiving returns are varied (Lump Sum or Regular Incomes)
Features of Child Education Plan
- Grace Period
The grace period is the amount of time you have from the due date of your premium to pay it without affecting your policy’s benefits. Monthly premium payment modes have a 15-day grace period, whereas yearly, semi-annual, and quarterly premium payment modes have a 30-day grace period. However, this may vary from policy to policy.
After paying two annualised premiums, the policy gains a Surrender Value.
- If there is no Surrender Value on the policy:
Your policy will lapse and your insurance coverage will end if you do not pay the premiums within the Grace period. You have a certain amount of time to reactivate the policy before it expires. If the insurance is not revived by the end of the revival period, the policy will be cancelled and no benefits will be paid.
- If a Surrender Value has been assigned to the policy:
Your policy will be lapsed and switched to paying up if you do not pay the premiums during the Grace period. You have the option to renew the insurance within the time frame specified for renewal. If the policy is not revived by the end of the revival term, it will remain in paid-up status and the paid-up value will be payable.
- Reduced Paid-Up Value
If your insurance has a surrender value and has expired for any reason, it will be converted to ‘paid up’ status. The benefits under the policy will be reduced after the policy is paid up. The Reduced Paid-Up Value would be used to compute all benefits, including the Death Benefit, Guaranteed Pay-out (for Money Back Option), Surrender, and Maturity Benefit.
You have the option to reinstate all of your policy’s benefits within five years after the Premium in Default’s due date. The corporation, on the other hand, would require:
- You must submit a formal application for revival.
- Evidence of insurability that is satisfactory.
- Payment of an amount equivalent to all outstanding premiums plus interest at the company’s discretion, subject to approval, for such resurrection, as determined by the company from time to time.
- Terms and conditions as the corporation may specify from time to time.
Why Do You Need a Child Education Plan?
- High Cost of Education:
You’re well aware of how costly it is to live and educate oneself. In the future, education will be much more expensive. From school picnics to fancy dress competitions, sports equipment, and exorbitantly costly tuition costs in schools and universities, you must be prepared to spend a significant amount of money on your child’s academic career.
- Return Value:
If you invest a small bit of money on a regular basis, your money will grow into a sizable quantity in the future. This fund would alleviate the financial load of higher education and relieve you of the concern of paying your child’s university fees on time.
An educational loan is the most prevalent means to finance expensive degrees. If you’re a young parent, you may already be paying off your student loans. There’s a good chance you’ve had a car loan or a home loan at some point in your life. Why would you want to take on more risk? That is when your savings, which you began today, will be most beneficial. A child investment plan relieves the stress of having to apply for a new loan.
- Investment and protection:
Through the best child education plan, you obtain the combined benefits of insurance and investments through a child education policy created for child education. No future payments will be due if you add a waiver of premium rider to your policy. Even if something happened to you, your child’s dreams would continue. It will assist you in keeping your word. Your children can study in any country and pursue any course of study they like.
- Tax Benefits*:
A kid insurance plan also comes with tax advantages. Unlike fixed deposits or equity shares, which are subject to long-term capital gains tax, the premium is deductible under section 80(C), and the maturity amount is tax-free.
*Please note that tax benefits are in accordance to current tax laws in India, which are subject to change from time to time.