Exploring How Child Plans Contribute to Planning for Your Kid’s Future
Most of us have heard our parents say this, “All we earn is yours and you are our future.” It is the truth, right? Childcare and education expenses are on the rise. According to a survey by the Economic Times in April 2022, the cost of raising a child in India for an upper-middle-class family can go up to Rs. 1.1 Crore.
The amount is almost an entire generation’s wealth for many. How can you ensure the security of your child’s future? Invest in child plans as early as possible. Child plans are child insurance and education plans. They are designed to secure your kid’s future. You pay premiums during the policy term and upon maturity, you receive a lump sum amount that can be used to help fund your kid’s education.
In case you meet with an unfortunate incident, your nominee will receive the sum assured based on the policy’s terms and conditions.
Why are child plans relevant?
Providing quality education to your child is important. But so is enjoying life, investing, saving, and setting aside funds for emergencies. In such a scenario, when an income has to split multiple times, beginning investments in child plans is more than a task, it is a necessity.
Investing in child plans allows you to take control of your child’s education and other needs. There are many benefits of buying child plans, Here are some of them:
1. Safety during financial emergencies: These child plans can act as an anchor during emergencies. Some plans offer you the lifesaving benefit that allows you to withdraw some of the funds partially after 5 years of having purchased the plan.
2. Tackle the stupendous education costs: Education costs are on the rise. However, it is not just that, getting a bachelor’s degree is not enough these days. Education, co-curricular activities and even skills have become a core part of all-round child development. Tackle these costs with child plans.
3. Makes securing education loans easier: They act as collateral against your education loan. This allows you to get better deals on your loan and the loan approval is a bit faster.
4. Return on investment: These child plans offer the potential for high returns on investments. You can ensure that your premium is bifurcated into investments that are going toward equities or debt or a mix of both. As with most long-term investments, the returns you can expect are good.
Apart from the above points that make child plans a wise purchase, the other benefits are:
- Lumpsum benefit upon your death or maturity
- Waiver of premium after your death. The company pays the remainder premiums.
- Partial withdrawals are allowed in some policies.
- Tax benefits under the Income Tax Act, 1961
- Riders can make the policy more favourable for you and your child.
You can also loop in financial advisors and CAs who can be your guides in this process. They will help you make the right decisions and policies that will make sure your child has a bright and secure future.