Features of Child’s Education Plan
To provide your child with good education is essential, as quality education makes it easier for a bright future and makes young learners into successful individuals. You need to ensure that cash flow should not stop at any crucial stage of your child’s growth. As the costs of higher education are on the rise, make sure your child gets the best education, for that you need to plan early.
The features of a child education plan help you to make an informed decision.
- In a child investment plan, minimum investment tenure needs to be considered for at least 3 years, which can be increased in multiples of 3 months. If the plan is for a longer period, you get a higher pay out at maturity.
- The minimum amount to be invested in a child education plan should be Rs. 500/- and gradually, increase it in multiples of Rs.100.
- Funding in the investment phase for regular premiums can be sent through a standing instruction on a parent’s bank account. It can either be done by depositing a cheque or cash.
- You can receive quarterly, annually, minimum tenure of the phase, 12 months, and multiples of 1-month pay-outs on your child investment plan.
Benefits of Education Plan
Most parents’ emphasis on education, determines the quality of life their child will lead in the future. Child education plans are the kind of investment options crafted for your child’s future financial needs. These education plans will allow you to invest, grow and provide for your child’s goal without much effort.
- Early, the regular, and small amount invested in a child education plan can be more fruitful, as it eases the financial burden, due to spreading over a more extended period. Gathering notable funds can reduce the pressure of providing for their education.
- The child education plan allows you to categorize your investments in life and it assures you that their future will not be at risk, under any circumstances.
- Protection in an unpredicted situation like the benefits of financial cover to the child in case of the death of a parent, the child gets at least 100% of the sum insured amount. The maturity amount is approximately 10 times the premium cost for higher education expenses.
- Due to the rise in education costs, investing in a child-saving plan would offer enough funds that will help your child to meet all the key educational milestones in his life.
- Permission of partial withdrawals will help to fund a special course your child wants to take up, as certain plans offer periodic pay-outs to help you pay for the expenses incurred to enhance your child’s talent.
- Adopt a dynamic fund allocation strategy, to make the most of the amount invested and save it from capital loss. You can go for a systematic transfer plan when the market is volatile.
- It helps you to fund your child’s school fees, in case the parent dies, the insurance company immediately pays a percentage of the sum assured. At the end of the policy terms certain percentage is paid annually. A sufficient amount is paid for your child’s school fees even in your absence.
- Child education plans offer a great investment scheme, and the premium paid on a child education plan is eligible for tax deduction under section 80C, up to a limit of Rs. 1.5 lakh in a year. Also, avail of tax benefits on the maturity amount under section 10 (10D).
- A child’s education plan not only helps you reach the goal by investing but also provides financial security to your family.
- Enjoy three in one tax benefits by investing in the plan, capital growth, and withdrawals from the plan, which are all exempt from tax.
- The premium paid on the child education plan qualifies for tax deduction up to Rs 1.5 lakhs under section 80C in a financial year.
- The growth of funds or any switches between debt and equity funds within the plan is exempt from tax.
- Tax-free partial withdrawals from the plan after the five-year lock-in period.
Why do you need a child’s education plan?
Do you want to meet larger-than-life goals for your child’s education? Make these plans a necessity with these 5 compelling reasons.
- The rising cost of education: The cost of education is increasing with time, as more technological advancements and innovations are introduced in the education sector. A child education plan helps to have the required funding for the college or professional course fees.
- Uncertainty of future work environment: Higher education facilitates additional learning needs. Plan for these uncertainties related to your child’s career with a good child insurance plan.
- Protect against uncertainties in Life: The untimely demise of parents is the biggest threat to the dream of your child and family. Child education plans have the option to continue investing in the planned goals of your child.
- Avoid borrowing for education: To pursue higher education, an education loan may sound like a more logical solution due to its tax-saving benefits, but you still need to pay interest on the education loan. Investment in the child education plan will help you to keep your borrowings low.
- Promote Entrepreneurship: One of the greatest challenges for entrepreneurs today is to raise capital. You can fuel your child’s entrepreneur ambitions early with investment.