The rate of education inflation has increased from 0.63% to 4.12% between April 2021 and April 2022 in India. The share of children’s educational expenses in the country reached nearly 65% between 2022 and 2023. These figures indicate how educational costs and expenses are on a rise in India. In this scenario, your monthly savings might not be enough to secure your kid’s future financially. However, the financial constraint should be the last impediment to a golden future for your child. That’s why you must invest in a child education plan to build a generous corpus for your little one’s future.
When is the right time to start investing? Right now! The sooner you start the financial planning for your kid’s education, the more time you can get to generate a significant corpus for this important goal. Usually, the payouts of a child plan are available right once your kid turns 18 or during the crucial milestones of his/her educational journey. Being an early bird will help you take maximum advantage of this.
First, you need to know about the benefits to look for in a child policy. So, here are some useful tips to help you choose the best child education plan.
Long-Term Investment Option
The best child plan must provide not only secure returns but also benefits of market-linked assets. That way, you can get the chance to invest over a long horizon and enjoy better returns through equity investments. As you approach your goals, the policy must offer the required security through a fixed income.
Goal Protection
A child education plan offers life coverage in the event of the unfortunate death of the kid’s insured parent. But it is not sufficient to have a one-time lumpsum payout. The best child policy should offer insurance payouts in line with the vital milestones of your kid’s educational journey. These can include admission to a college or moving abroad for higher degrees.
Premium Waiver
The best child plan must come with the feature or an added rider of a premium waiver. With this benefit, the policy can remain active even after the insured parent passes away. As a result, the surviving parent doesn’t have to bear the trouble of paying the remaining premiums.
Options of Various Payout Frequencies
This benefit should also be available in the best child education plan. As such, you can get enough flexibility to choose the most suitable payout frequency aligned with your child’s educational milestones and financial needs. If you have adequate savings to finance your kid’s education in the school years, you can go for a limited payout plan to use the funds for your little one’s higher studies.
Consider a few things before investing in a child education plan. These include the stream of higher studies your kid would like to pursue, tuition fees of top institutions that offer the course, rent and living costs in case your child would study abroad and the rate of education inflation in the upcoming years. Then you can use a child education planner on the insurer’s website to determine an ideal investment amount.
