Being a parent is one of the toughest jobs and requires a lot of patience and love. Your child requires your attention and proper care in all aspects of life, whether it is their education, physical and mental development, or even safety.
Although there are numerous ways to fund your child’s education like taking student loans, it is often associated with a large debt that your child may find hard to get rid of. In such a case, saving money in child saving plans seems to be a better solution.
A child plan allows you to put aside a specified portion of your money for the betterment of your child’s future. The earlier you start investing in such a plan, the larger corpus you can accumulate to fund your child’s further education.
What is a Child Investment Plan?
Child plans are life insurance policies tailored to make sure your children are always taken care of. Being a parent, raising your children properly, and providing them with a good education are some of the most important parts of your life.
Child plans can make it easier to achieve your dreams for your child, including the dream of sending them to a prestigious university. There are several savings plans for children available to support your child’s academic dreams.
Why You Must Have a Child Investment Plan?
Death of Parent
The death of a parent can be the most devastating event that may occur in a child’s life, which may turn their life upside down. This unfortunate event may even lead to consequences like giving up on education that will harm your child’s future.
Amidst the unpredictability of life, you may not know when death will be knocking on your door. If you want to make sure that your child’s future will be safeguarded after your death, invest in a child insurance plan as soon as possible.
In the event of your unfortunate demise, your child will never have to pay any premiums, and he or she will receive a lump sum amount upon reaching the age of maturity.
Fulfilling Your Child’s Dreams
You can’t plan for your child’s career before he/she is even born. But you can save for the future by investing in child savings plans now, which pay appropriate fees when your child is ready to make the most out of it.
Depending on your child’s interests and skills, he has the option to take any course of his or her choice. With the money that is provided by the child education insurance policy, you can help your child fulfil his or her dreams and career goals.
If you start investing wisely now, the accumulated corpus at the time of maturity will be sufficient to pay for the child’s college fees. You can get child education plans that will ensure the child’s dreams are turned into reality.
By enrolling in a child savings plan, you can easily save a portion of your income every month and keep it separate from your day-to-day expenses. This will encourage you to develop a pattern of saving that makes it easy for you to accumulate a financial corpus for the betterment of your child.
Once you’ve accumulated a significant amount of money, you can use it to make sure your child’s future is as secure as possible. With a child plan, it is easier for you to make sure your money will be put to good use.
Moreover, since you have to commit to regular contributions, you’re locked into the policy unless you want to pay a substantial surrender fee and lose all the benefits promised by the insurance company, which is not recommended.
One of the most prominent benefits of a child investment plan is that it also provides you with various tax benefits. As per section 80C of the Income Tax Act of India, the premiums paid towards a child plan are eligible for tax deductions of up to Rs. 1.5 Lakhs in a financial year.
Moreover, the maturity proceeds promised with the policy are also exempted from any kind of taxation as per section 10(10D) of the Income Tax Act. This allows you to save a significant amount of money at every step of your investment.
Bank-issued education loans carry high-interest rates, so a person carrying such debt will have a harder time starting their career since they’ll have to pay off the debt as soon as possible. A lot of students fall into this debt trap and find it very hard to cope up with it.
Student loans force people to do additional work as a condition of getting an education, and that work makes it harder for them to experiment. Additionally, those with student loans often have to delay saving and investment.
On the other hand, if you start planning for your child’s education by investing in the best savings plan for child, you can eliminate the need for the debt at a later stage. This ensures that your child is debt-free at the beginning of their career and can make independent choices.
How To Start Investing in a Child Plan?
All NBFCs and banks offer educational plans, but only some offer the right policy. It’s important to choose a base plan with cover and enough to invest in higher education. If you want to be practical about unforeseen circumstances, then you should purchase the plan with additional riders. Doing so will give your child guaranteed financial support and help them realize their dreams.
There’s no question that college is expensive. Even with financial aid, you could be on the hook for thousands of rupees each year. With student loans, the amount you owe can grow to an even more staggering sum. The good news is that there are ways to help pay for college without taking out any loans at all. By starting a child investment plan early, you can save up money to cover your child’s education expenses while minimizing your tax burden.