Is Availing a Child Insurance Plan Worth the Cost?

Posted by sammi maheshwari on January 31st, 2018

A child education plan, also called education insurance, is one of the best ways to secure the future of one’s child or children. Raising one’s children comfortably and offering them all the opportunity to excel in the world is the biggest priority of every parent. Thus, making it imperative for parents to systematically plan for their child’s future.

Recognizing this need of parents to provide security for their child’s future, including education expenses, insurance companies have come out with comprehensive insurance plans that are customised to feature financial security for children, even in the absence of their parents.

However, it is worth doing some amount of research to ascertain what one’s child’s requirements will be for the future and to choose an appropriate child education plan that best meets the requirements. This article discusses the benefits of getting education insurance for one’s child.

Guaranteed Sum Assured at Pre-defined intervals -

Higher education costs are shooting up each day. The thought that a child could fall way short of the required corpus for college, owing to lack of planning could be life-wrecking. Thus, it is important to plan the life coverage component in a child education plan carefully. Many experts are of the opinion that one should buy a child insurance policy that has a sum assured component of at least 7 to 10 times the annual income of the child’s parents. Thus, policy pay-outs can be pre-planned to align with the child’s education requirements, to ensure one receives is never a shortage of funds for the same.

Death Benefit -

With a child education plan, one can be sure that he/she has secured the financial future of his/her child. One of the most important aspects of planning for the future is to plan for uncertainties, and one of the greatest uncertainties in life is when one will die. Taking out an insurance policy for child education can ensure that even in the event that one dies suddenly, one’s children will be provided for. The best education insurance policies in India waive off the future premiums and reversionary Bonus continues to accrue till maturity of the plan, upon the untimely demise of the policyholder.

Accrued Bonuses -

A child education policy offers accrued bonuses on each pay-out which are in line with the payout option selected.

Higher Returns -

One can choose education insurance policy in India, that offers either guaranteed return or market-linked, to avail benefits similar to a ULIP or endowment plan. In such a child insurance policy, a portion of the premium paid goes toward paying for life cover and rest of the premium amount is then invested in various investment options such as equity and debt instruments.

Tax benefits -

Policyholder availing an education insurance policy in India can avail tax benefits under Section 80C and Section 10 (10D) of Income Tax Act, 1961, which augments their savings.

Through a well-selected education insurance policy in India, policyholders can rest assured that their children have the necessary funds for their higher education, marriage or business ventures, with or without them by their side.