Children across the world confront numerous challenges in accessing education. Among the different challenges they face, the most common is the lack of finance. Though they’re entitled to free basic education yet in many families, poverty becomes a barrier to schooling.
However, some financial institutions have come up as a friend to these families so that they can educate their kids while not sacrificing their primary needs.
Why Should You Opt for Child’s Education Policy?
Calculating the amount of fees you’re required to pay becomes easier with education plans. It is because the fees of schools usually remain with domain of public knowledge. From school to college, you have to reserve a huge chunk of cash for educating your kid. Approximately 65% of parents spend more than half of their earnings in their children’s education.
The sharp rise in the fees of schools is a wake up call for those who are ignoring saving for education of their kids. Being a parent, you should realize education is soon going to turn into a costly affair.
You may think- ‘Why should I invest in the best child education plan?’ You may be saving money to get support in emergency situations. But when you’re investing in an education plan, you cannot withdraw the money in unfavorable conditions. If you start to save early, spending money on child education policy won’t create a burden on your shoulders.
How to Pick the Best Education Plan?
Change your investment strategy according to the age of your kid. Picking the best child education plan calls for a lot of research. Keep in mind certain essential points while comparing different plans.
Equity Linked Plans for Risk-takers:
Unit-linked child’s education plans are designed for those having sufficient investment time. Surveys have proved that equities promise huge returns for long-term investments, enabling the parents to derive maximum benefit out of it. Ideally, the education plan you have selected must create a balance between debt funds and growth covering the risk simultaneously. Additionally, it should protect your profits in the investment by including system transfer option in it.
Premium Waiver Benefit Plans:
Most of the education plans come with premium waiver benefit. It may either be included in the feature of their plan or they may offer it to you as an option. The premium waiver gives one immense support if his or her parents/parent die suddenly. It will go on funding the insurance policy till it matures while giving away the future premiums. Consequently, the sum assured remains intact. You will get the said amount when the policy matures.
Simple Endowment Plans for Safety Lovers:
If your time-frame of investment in the education plans is less than 10 years, consider simple endowment plans. Moreover, if you are afraid to take risks, these plans are good for you. However, it won’t ensure you with a big return for your kids’ ULIP plan. But, it can support you efficiently against the unstable condition of the market.
Consult with Your Financial Planner:
Your financial planner will be able to calculate your annual investment regarding the insurance. With years of experience in this field, he can also inform you about the cash you’ll get at maturity. Generally, the insurance companies set illustrations on the basis of return assumption ranges somewhere between 6 and 10%. Whereas, conservative investors prefer to go with insurance companies offering a 6% return, the aggressive investors prefer to invest their money in insurance offering 10% return.
Examine Thoroughly Features of Child’s Plan:
Make a comparison between features of different education plans for kids. If your child has no sibling or dependents, don’t get a plan in his or her name. But, if you still want to get the plan in your kid’s name, make sure that it is offering premium waiver riders benefits. By doing so, you will enable your kid to enjoy the benefits of the insurance while freeing him or her from the burden of paying premium. Otherwise, you will put your child’s future in risk.
Apart from the points mentioned-above, you should also check whether the insurance you are intended to buying offers flexible terms. Avoid those plans having high charges of allocation but gives low returns. In comparison to various types of market plans, child plans are quite pricey. The main reason behind the high cost of educational plans is the mortality charge imposed on the resultant sum and the future premiums that the insurer is bound to pay when someone claims the insurance.
Go through the fine print carefully prior to investing into it. Reading the policy documents thoroughly is significant to prevent factors that may create issues in future. Hence, invest for the future of your kids judiciously.