The rising cost of higher education in India doesn’t seem like taking a break any soon time soon. In 2017, the market worth of the education sector was around ₹7,08,000 crores. In this, the higher education segment contributed 60%, and school education contributed about 40%, as published by Times Graduates in June 2017.
As of now, you need to think about the child’s future and start depositing funds through meticulous saving habits. Indeed, only the best child plan would effectively cover all the critical aspects of a child’s policy. It may also include their education, marriage, and even healthcare! To ensure that your child’s future is financially secured, various factors can be taken into account as a parent. It includes the cost of education. Yes, education is one of the primary aspects that have to be taken care of! Then, you would also be required to think of the size of the savings. Likewise, specific pointers should be kept in mind while you decide the perfect child policy that can help you secure your child’s future!
The pace at which the cost of education is rising in India is much faster than our inflation. This is why it is always recommended for parents to invest in a good child insurance policy.
Life insurance for children offers dual benefits of investment and insurance. Such plans ensure a secure future for children. The policy offers maturity benefits, paying a sum assured as the child attains adulthood. The child insurance company will ensure the life of the minor and offer death benefits too. In case of the child’s unfortunate demise, the policy also protects the family against the sudden and unexpected costs such a loss.
5 Ways a Child Policy is Beneficial for the Future
#1 Helps in Funding Expensive Education:
The aim of most parents is to save for their child’s education, keeping their own hopes and aspirations aside. A children’s policy comes for the rescue of such parents.
#2 Encourages Early Savings:
A child insurance plan can be bought when the child is as young as 2 weeks. This gives parents a lot of time to save money and accumulate the maximum wealth to ensure a secure future and the best education for their little one. Buying child insurance at the earliest helps parents gain the advantage of low rates and high returns.
#3 Regular Savings:
When saving, discipline is the key. However, we have the tendency to procrastinate things, especially saving. When you save regularly, you need to put away small amounts to build a large corpus, rather than having to suddenly invest a huge amount. A child plan requires parents to make periodic investments towards a saving tool. If required, parents can even withdraw money from the plan, since most plans allows occasional withdrawals before maturity.
#4 Pays for Education Even if the Investing Parent Dies:
Premium waiver offered by the child insurance company in case of the unfortunate demise of the parent is a major advantage that adds to the desirability of a children plan. The beneficiary or the child gets the pre-decided lump sum amount on maturity to help them pursue the dreams their parent once saw for them.
#5 Can be Used to Take a Secured Loan:
If required, a child plan can be used as security to get a loan. Many banks and other lenders accept child insurance policies to process education loans and other personal loans.
Parents need to be sure of the reasons why they are investing in child policy. Is it for education? Or for marriage? This will help parents do the right calculations to decide on the amount while taking inflation into account.
Now, let us understand how you can do that. Contextually, planning things, and actually working on it can be difficult at first! Here are some of the ways that have been explained comprehensively to decide the best child policy for your little one. Follow on!
How to decide on a child policy?
You can sue the power of compounding to your advantage.
It is clear that a lot of funds go into availing higher education if you are opting for any descent educational institution. You have to keep this fact intact in your minds. In this manner, as a parent, you should try to build a strong fund for your child’s education and future planning. It is essential to factor in the reality that the cost of education is way above than it used to be some years ago, right?
Most of the time, it is seen that people opt for traditional investment tools, including FDs. Well, it is not wrong, but eventually, there are more options for you to deposit in the current time. You should definitely explore the different investment avenues that would help you compound all your earning to a better approach. With the ultimate aim for building your child’s educational funds, you should consider your child’s financial requirements if you are not around.
In that way, you can also plan for better education for your child. You can choose a systematic investment route like SIP and avail the benefits of compounding. It would help you to build the funds faster and in an efficient way.
This can be the perfect way to get started with your child’s investment approach! If you are opting for starting early, there are different benefits that come along the way! Some of them are the opportunity to earn a higher, extended time horizon and whether more significant risks. The best time to start this is when the child is born as it allows a better way to cushion their future.
Contextually, the befit of opting early financial planning for your child would provide better outcomes if you are interested in investing in different schemes. Remember, you have to play this for a long-term trajectory.
Always have access to a comprehensive insurance policy.
If you are just ready with a strong investment plan, that may not be enough to get along! It would be best if you also considered the various unforeseen situations and disadvantages of your child’s life. So, it is essential to get your child’s life insured effectively. Yes, it is possible with the best child policy kept intact in place. Always pick a child’s insurance plan that offers extensive coverage over all the benefits and offers an array of other compensations as well.
Consider the aspect of inflation while planning!
According to current open research, it is found that the cost of any professional degree doubles every six years. So, it is essential that you consider the aspect of inflation while planning the perfect child policy for your little one.
Secondly, it is also good to keep an account of the factors because it would help you protect your child’s education funds from being eroded. One of the best things that could be seen as a result of opting for this is that your child would be mentally and financially free to get onto the wheels of education.
Protecting and prioritizing the vital goals
As soon as you listen to the terms, the first thing that crosses your mind is a short-term goal and long-term goals, right? It is understood that financial planning for your child has to be an indispensable part of shaping his future. Lit allows them to be better equipped to get ready for a particular goal. It is thus, important as a parent to cover each of the plans separately. You can also opt for taking separate term plans to safeguard the vital goals. Doing things in this manner would eventually increase the probability of success at each of the goals.
Selecting a premium waiver plan
Life is uncertain, agreed? And in case there is an event concerning the unfortunate demise of a guardian, it becomes difficult for the child to flourish with all his requisites. So, you must create the required financial backing for your child!
The bottom line
Go through the above tips and tricks and follow them while you plan for children’s investment policy. Take care of the other factors that are driving your financial world to decide the best for your child!