Your child’s future is one aspect that automatically warrants your attention. Now, the question is, how do you choose the top plan for child education in the country? There are several providers and insurers offering these plans with varying features and benefits (as you may already know). Let us line up some of the commonest aspects that should go into your checklist.
Selecting the Best Plan for Child Education – Things to Remember
Here are the points that you should never exclude while comparing and choosing the best plan for child education.
- The plan should come with a dual advantage for policyholders, i.e. life coverage for a decent amount and also savings/investment options. Note that not all plans will explicitly provide both.
- You should be able to make partial withdrawals in emergencies and at various stages in the child’s life where you have to pay for educational costs. This ability varies significantly between different plans, so check the specific terms.
- The plan should offer a lump sum amount (or even monthly income) to the child in case of the demise of the parents. It should also remain active (with premium waiver features) and the insurer should be taking care of future premium payments. The payout at the conclusion of the tenure should be sufficient to ensure the financial wellbeing of your child.
- Child plans should always be tax-efficient. You should be getting deductions under Section 80C for the premium payments that you make, while the maturity amount should also be exempted as per Section 10 (10D) of the Income Tax Act. Keep in mind that these benefits are subject to the overall limits of these sections and may change based on amendments to tax laws.
- There should be options to choose investment options based on your risk appetite, particularly in unit-linked insurance plans (ULIPs), along with periodic portfolio reviews and fund changes if required.
- Look for plans that have extra benefits such as loyalty rewards, bonuses, wealth boosters, etc. that add to your corpus. However, these benefits are not standard across all child education plans, so be sure to read the policy details thoroughly.
- There should be a reasonable cost structure for the plan in terms of the fees and charges. You should compare the same across multiple policies and take a closer look at their features alongside. It’s also important to understand the total cost of the plan over its duration, including any hidden charges that might affect the overall return.
Finalizing the Best Plan for Child Education
Remember that these points will help you finalize the best possible policy that will ensure financial security for your child. He/she should be able to realize his/her educational and other aspirations without any difficulties, irrespective of whether you are around or not. That should be the guiding force behind your decision. At the same time, you should also compare premium amounts for your desired coverage and see what is affordable for you in this regard.
Make sure you start as early as possible, ideally when the child is born. Even if you begin in the formative stage (when the child is between 1-8 years of age), you will still be able to amass a sizable corpus to take care of his/her educational and other life goals. Early starts ensure greater benefits through the power of compounding, potentially allowing for significant accumulation if you start earlier.
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