Child plans basically help in financial planning for your child's future needs at the right age. As a parent you can secure your child’s future with plans that encompass children education plan.
We all know how higher education costs have been rising in India.
For young parents this is a great worry. How does one accumulate ample savings in order to meet the high education costs in the future? Help is at hand if one considers child education plans offered by (company). A child education plan helps you save ample amounts through the regular premiums paid for this purpose. Typically, in a children education plan, a portion of the premium is earmarked for providing financial protection to the child. The other portion is used to invest the money so that it grows well during the long term of the children’s plan. These two aspects of a children plan ensures that the there is adequate provision for a child’s higher education in case of unfortunate event as when the term of the child education plan is over. Another important aspect of child education plan is you get tax benefits both for premium paid up to Rs 1.5 lakhs under Section 80C of the Income-tax Act, 1961, and for maturity proceeds under Section 10(10D) of the Income-tax Act, 1961, subject to fulfilment of the terms and conditions stated therein. This ensures that the growth of the money under a child education plan is tax-efficient as well.
Financial protection features in child plans ensure that your child gets the best in the future even in your absence.
As a young parent it is very difficult for you to put a finger on what exactly will be the cost of your child’s higher education. Therefore, it is important for you to have ample savings that will easily cover the costs. At the same time, the challenge is to also ensure that your investments for this purpose grows well enough to outsprint runaway increase in higher education costs as has been prevalent in the last one decade. It is here that a child education plan, offered by (comapny), comes to your help.
Unlike children’s expenses like school fees, higher education costs can’t be met from regular income. These large amounts can only be saved over long periods. This actually is of great help since it helps you achieve this big goal in small steps of regular investments through your premiums for the child plan.
They provide the ideal combo of protection and savings, thanks to the many features of these children plans. Now make your child future bright and secure without worrying about huge fees and expenses in future.
Here’s a little overview of just some of the many helpful and useful features of the best Child Education Plan: A child plan comes loaded with a wide range of useful features to ensure a rewarding return and protection. Quite expectedly, a child education policy is a must for every parent.
- Sum Assured
The sum assured in a child education plan is the amount of money that is paid out in event of the unfortunate or untimely demise of the policyholder. Most of the time, the sum assured must be more than 10 times the current gross earning of the policyholder.
- Premium Amount
It is subject to the sum assured and the amount of maturity benefit you opt for. You may opt to pay the premium amount frequently on regular intervals or for a certain period of time.
- Policy Term
When you realize that your child should get on his/her feet is the best time for the policy to mature. Choose the policy term to meet the exact period. For example, if one of your children's age is 10 years, then choose the policy term of 8 years.
- Waiver of Premium Benefit
Waiver of Premium (WoP) is an inherent rider of a child education plan. This feature is applicable if the policyholder dies in a stipulated period of time. In such a case, the sum assured will be paid out to the nominated beneficiary, while the due premium for the remaining policy term is paid by the insurance company.
At the maturity of the policy, the nominee is entitled to receive the maturity amount as mentioned in the policy document. In case this feature is not a part of the plan, it is recommended to include it without failure.
- Partial Withdrawal
It is often seen that parents instead of holding back themselves for the policy to mature, like to withdraw the sum assured in multiple fragments whenever they need it only after completion of paid premium period.
This is often selected to fulfil the financial needs of the child at certain key moments. Many child plans also come with an option of partial liquidity.
- Premium Payment Mode Sum Assured
The sum assured must not be less than at least 10 times your current income, says the thumb rule.
Regular premium- Under this mode of premium payment, you need to pay the premium on a regular basis.
Single premium - Under this mode of premium payment, the premium is paid only once.
- Immediate Financial Protection
In case of death of a parent. Child plans pay a lump sum amount in case of death of earning member who was paying the premiums for child plan. This money is completely tax-free and is usually sufficient to pay off any immediate debts so that child education is not impacted.
- Maturity Amount
You should choose the maturity amount keeping an eye on your child’s future. plan the maturity amount that you would need at policy maturity. You can receive the maturity amount as a lump-sum pay-out over a period of 5 years.
- Tax Benefits
All child plans fall under the highest bracket of tax exemption i.e. E-E-E category. This is the highest grade of tax benefit accorded by the Indian Tax Laws to schemes like PPF.
- High Returns that beat inflation
Our child plans offer returns upto 12-15%. Most government schemes like SukanyaSamridhi Schemes offer much lower interest returns on your investments.
- Claim Process
You would require the following documents while filing a claim for child plan:
Duly filled claim form, the policy document, medical certificate, death certificate, diagnostic reports, prescriptions, post-mortem report (in case of unnatural demise), FIR copy (in case of unnatural demise), NEFT details, and KYC of the nominee and the policyholder.
Now having said so, in today’s time somebody who desires to pursue engineering in any of the premier colleges in the country it would cost about Rs. 10, 00, 00. And, then in the coming years say 15 years it would be somewhere between 40 to 50 Lakh.
Likewise, if a private medical college charges Rs.25, 00, 00 then you can easily calculate that in the next fifteen years you need to have a corpus of about a crore.
India is one of the most opulent developing countries across the globe. Gone are the days when India was only limited to be known for its rich culture and traditions. Today, it has also earned a name when it comes to the educational sector.
Today, in India, we have a plethora of options available in terms of schools, colleges and universities and opting for the ones that suit your requirements. However, it is prudent to understand the factors, which affect the cost of education in India.
Accommodation: Today most of the Indian universities/ colleges provide accommodation facilities within the campus both for the Indian and non-Indian citizens. In case, you are or intend yourself to enrol into a college, which does not have an accommodation facility there is nothing to be worried about. One can conveniently look for personal accommodation.
Depending upon the suitability, one can opt for a rented flat or a private hostel with sharing room facility. Opting for private accommodation has its advantages. One can easily find a room between Rs. 10, 000 and calculated annually would be around Rs. 1, 20,000.
Additional Expenses (Every Week) Includes:
Outside Eating: Rs. 1500 to Rs. 4500
Public Transportation: Rs. 50 to Rs. 100
Private Transportation: Rs. 500 to Rs. 1000
Miscellaneous: Rs. 200 to Rs. 500
Leisure Activities: Rs. 500 to Rs. 1000
Undoubtedly, parenting a child is not an easy task. As the child grows, similarly the amount being spent on them also increases.
- Primary Education: Generally, if a student is studying in the government school somewhere aged between 6 to 14 years the cost of education is almost negligible sometimes almost free. On the contrary, when it comes to private schooling the school mostly charges let's just say towards a lower end Rs. 1200 to Rs. 2, 000 every month.
- Secondary Higher Education: The secondary higher education essentially covers children who are aged between 12 to 18 years. So, if a student is in a government school for 6 years at a stretch it would cost him approx Rs. 30, 600 and in private schools, the parents would end up paying approximately Rs. 3, 96,000.
In case, if the child is put up in a boarding school, the parents would end up paying Rs. 18, 00, 000 for the coming 6 years. As per a survey conducted by Assocham, 169% has been the ascent in inflation in regards to both primary and secondary education from 2005 to 2011.
- The Expense of Graduation and Post Graduation Education in India
1. Government College/ University: Rs. 5,00,000 to Rs. 6,00,000
2. Private College/ University: Rs. 8,00,000 to Rs. 10,00,000
3. International College/ University: Rs. 1,00,00,000
- The Expense of Medical Studies in India
1. Government College/ University: Rs. 5,00,000 to Rs. 10,00,000
2. Private College/ University: Rs. 18,00,000 to Rs. 20,00,000
The Expense of Commerce and Arts/Humanities in India
1. Government College/ University: Rs. 2,000 to Rs. 15,000
2. Private College/ University: Rs. 2, 50, 000 to Rs. 5,00, 000
3. International College/ University: Rs. 50,00,000
- The Expense of Engineering in India
The course of engineering is considered to be one of the most sought career options undertaken by a majority of students in India. Besides, it is also one of the reputed and well-paid jobs. The US Silicon Valley comprises of the Indian based- engineers.
For a four-year engineering course, a student ends up paying Rs. 1, 25,000 to Rs. 5, 00,000. And when it comes to India’s finest engineering colleges such as IIT, NIT, BIT’s Pilani, etc. the parents need to pay approximately Rs. 10,00,00- to Rs. 15,00,000 respectively.
- For Post Graduation-
Just like the expense of engineering, you may consider the expense similarly.
One of the most cherished dreams for any medical aspirant is becoming a doctor. Becoming a doctor is something, which takes in a lot of hard work and sincerity and something to take extreme pride. In India, the medical seats are limited and the competition is high.
In terms of fees-structure and other expenses, the government colleges/ university have a reasonable structure with fewer than Rs. 10, 00,000. However, in private colleges/ universities, the fees could easily go up to Rs. 50, 00,000 for the equivalent.
And, if someone is interested in undertaking a postgraduate degree in the same field, then one should be mentally and financially stable to spend approximately Rs. 30, 00,000 in a private institute.
As discussed earlier, raising a child is no meek man task and to raise a child in the best possible manner financial planning is of utmost importance. In case, as a parent you still wonder in regards to the importance of planning then we will help you.
The below table consists of the basic and essential educational expenses that are involved when it comes to raising one children:
Expense Yearly Expense For Single Child Yearly Expense.
Basic Expenses Involved In School
School Uniform Rs. 3,000
Transport, Lunch and Tuitions Rs. 36, 000
School Shoes Rs. 3500
Sports Kit Rs. 3500
Bottles and Bag Rs. 1800
Coursebooks Rs. 4500
Computers Rs. 2500
School Club Rs. 2500
Stationary/ Newspapers Rs. 3000
School Trips Rs. 3800
Building Fund Rs. 15, 000 to Rs. 25,000
Primary Level Rs. 2,000
Secondary Level Rs. 4,000
Coaching/ Tuition Expenses
Primary Level Rs. 3,000
Secondary Level Rs. 8,000
FD's are simple to understand and that is why they are popular in India. However, they suffer both in terms of growth and impact of tax. Remember, being low risk, its interest income is always being nibbled by inflation.
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