Child Education Plan: Everything You Need to Know

Education Plan

As parents, we always aim to provide our children with the best choices in everything they would like to do in life, especially in education. Therefore, one of the main tools parents use to maintain a strong financial corpus to fund their children’s future needs of education, marriage, etc., would be these child education plans offered by many financial institutions today. 

How do child education plans work?

Investment cum insurance policies: These plans provide your child with financial security in case of the untimely demise of a parent. In the child education plan, premiums must be paid to the insurer for a particular period.

A lump sum amount is paid out as a benefit on the timely fulfillment of the premium and at the maturity of the policy term. The premiums paid in these plans are bifurcated into providing life cover for the parents, and the balance is invested in debt instruments to offer savings for the child.  

Types of child education plans

Child endowment plans

These low-risk child education plans provide a life cover and guaranteed maturity benefits. 

Child ULIP (Unit Linked Life Insurance Plan)

In these plans, a part of your premium is used for savings for your child, and the remainder of the premium is invested in debt and equity instruments. While providing a slightly higher return, they are somewhat higher in risk than the traditional child endowment plan. 

Single premium child plan 

The policyholders pay a one-time, single premium amount in a lump sum for these plans to stay hassle-free for the rest of the plan period. 

Regular premium children’s plan 

Unlike the single premium plan, these plans offer the policyholder the flexibility to pay premiums at regular intervals as fixed with the insurance company. 

Education Plan

Benefits of child education plan

Wanting to provide your child with the best education is what most of us as parents wish to do in today’s world. However, with inflation on the rise, providing good quality education at the choice of institute is more of a pocket pinch than ever. Therefore, a good education plan is a must today to secure your child’s future. 

Some of the benefits of these plans are as follows: 

  1. Tax exemption benefits: the premiums for these policies are eligible for a tax deduction. Investments in the plans are tax-exempt. 
  2. Security for the child’s future: these plans help In systematically saving and providing a lump sum fund for the child’s educational needs in the future, 
  3. Life insurance policies play a dual role in saving and providing life cover to the policyholder. 
  4. Some of these plans, like the ULIP plan, add bonuses for the investor. 

Conclusion 

To sum it up, a child’s success in life depends on a good education path, which requires careful planning and a sound financial corpus. Undoubtedly, one of the best instruments to achieve that financial goal systematically over the years, child education plans are one of the most sound and safest ways to go about it. 

Also Read: How Education Loan Helps In Building Career?

© Ruchie Verma.

Disclaimer: This post is written as an informational part, please read all guidelines carefully before investing in financial transactions.

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Ruchi Verma

Certified parenting teen practitioner, multiple Award winner, mother of two active kids believes in sharing the right source of information to readers which could help them in every possible way!!

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26 Comments

  1. Very informative article. Saving for children’s education is one of the most important goals for the parents n I think every parent shoud know this.

  2. I don’t have my child now but it’s great to know about this. I will also pass it to some other parents as well. Thank you for sharing!

  3. Out of several other responsibilities as a parent, one is making our kid’s future secure. And with life getting very unpredictable, it is good decision to think of Child Education Plan. Atleast we will be at a peace that our kids will not face any problem in case of any unexpected circumstances

  4. I don’t have any children yet, but I’d like them to have an Education Plan in the future. If something were to happen to me, I want to make certain that they complete their studies. Excellent reading!

  5. Thank you for sharing. I never knew there was a plan like this for children. I’d always thought it’s only trust funds. I will definitely explore more on this.

  6. We have similar plans here in the US, and it is definitely useful. Now that our older child is in college, we see how much it benefits us (not just in tax exemptions, but also worrying less about financing education for our children)..

  7. Thank you for your contribution. I had no idea there was such a program for children. I’d always assumed it was only trust funds. I will definitely look into this further.

  8. in this uncertain era of pandemic, it is important to plan ahead for financial things. specially, when it comes to child education, it is important we make solid plan to secure their future. I was not aware about other benefits like tax exemptions of taking a child education plan. thanks dear for enhancing my knowledge in this aspect.

  9. First I had no clue what a child’s education plan could possibly be. I thank that’s because I live in Germany, and education is free. You don’t really need a plan. However, there are other aspects of life that should be covered and protected.

  10. I must say that the USP of the plan is the regular premium option. Quite often lack of funds becomes a major issue. If we can pay it in parts its all the more attractive

  11. It is important to have insurance policies for children. Life is getting more and more uncertain these days. Hence having a solid future plan is inevitable’

  12. I wish I knew about these plans when I had my kids. My husband never believed in savings. After he passed away, I struggled for their education and could not afford PG education for both. I will always regret what I couldn’t fulfil. Every parent should invest in children’s education. It has become so expensive and ill only increase with time.

  13. With increasing expenses and competition it’s crucial that we keep a good financial backup for our children’s education. We have taken a few of these and planning to explore more.

  14. I agree thorough planning is needed when we are thinking about kids education as education should be our first priority and is becoming expensive too. Well researched and detailed post.

  15. The right blog to put up especially after the whole corona storm. I had no idea about the various plan to secure our child’s future.

  16. Having a plan for our children and their future is very important. I have read this article very seriously and made mental notes to get things into the right picture for my child’s education and successful future.

  17. Very important topic which most of the parents dont thing. It is very important to have insurance policies for child’s future education.

  18. Many parents like me are surely going to use this article for planning financial investments for the better future of their child. I this policy with life insurance is a great option. Also is there any policy which also has provides health insurance cover?

  19. With the rising cost of living – planning and systematic saving is something which will help us to get through our expenses in future. You have touched upon a very interesting and helpful topic.

  20. With rising fee structure and varied universities all over the world, it will be good to plan about education expenses. These are some excellent plans discussed here, shall look for ULIP plan for my elder one.

  21. I work in an insurance company. General insurance not life. And these policies are often discussed in the office to save the tax at the end of the year. Noone discusses the benefits of it they are taken for granted. All these policies are really beneficial for our children and their future endeavours, one should think about them seriously.

  22. With inflation on the rise, providing quality education at a good institute definitely is not easy. SO It is very important to have insurance policies for education.

  23. Every parent thinks to add big amount for child’s future. But for taking that step a more informed decision should be taken. Thanks for telling me about these education plans.

  24. This is really good information because now education cost is flying over the ceiling. It’s always good to plan for your children’s higher education well in advance.

  25. Child insurance plan is a necessity now-a-days to fulfil child’s dream with a best life insurance cover and meet child education, investment & other needs.

  26. With education becoming super expensive by the day, and kids demands and needs ro study abroad for higher education , it’s a must for us as parents to save up for their future. There are many avenues to save well for our kids future and should be tapped well to make the best of it.

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