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Tips for Building Your Child’s Overseas Education Corpus

 
 

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

In the pursuit towards professional excellence, higher education from a reputed foreign university can be highly beneficial. It can provide your child great academic exposure and help build a competitive advantage. However, foreign education is expensive!

By the time your child knocks on the university doors, costs would have shot up several times. To provide for this future expense, you must start early and plan well. Here are some tips:

In the pursuit towards professional excellence, higher education from a reputed foreign university can be highly beneficial. It can provide your child great academic exposure and help build a competitive advantage. However, foreign education is expensive!

By the time your child knocks on the university doors, costs would have shot up several times. To provide for this future expense, you must start early and plan well. Here are some tips:

Learn About the Costs

The cost of overseas education will vary basis the location (country and city), college, type and duration of course. Peripheral expenses towards accommodation, food, local transportation, insurance, etc. should also be researched well. Use an inflation calculator to ascertain the future cost.

Cover for Macroeconomics Changes

While planning for overseas education expenses, you should consider the economy of that country. This means the effect of local inflation as well as the Purchasing Power Parity between the home and foreign currency.

Provide for Emergencies

While studying overseas, your child will need additional safety, which comes at a cost. Consider a comprehensive overseas health insurance or student insurance policy that can cover all types of contingencies.

Start Saving Early

If you invest Rs. 5,000 a month for 20 years, your corpus can grow to Rs. 28,45,000 (@8% return). On the other hand, if you delay by just 5 years, you will have to invest Rs 8,500 a month for 15 years to reach the same corpus. In effect, the 5 year delay has cost you an additional investment of Rs. 330,000!

Luckily there are financial products that allow you to save systematically with regular investment without the hassles of actively managing your money.

Max Life Child Plans can help you build your child's foreign education fund. It offers multiple investment fund options based on your financial risk appetite.

You can avail the unique Dynamic Fund Allocation option that manages your investments by putting more money in aggressive funds during the initial stages of your policy and smartly shifting towards more conservative options as the policy gets closer to maturity. Thereby helping you make the most of your investments while minimizing risks.

Let Us Learn the Policy Working With an Example

Assume that you are a 35 year old male and you want to start saving for your 5 year old child's higher education - which is 15 years away. You can start investing Rs 75000 a year in the Max Life Shiksha Plus Super Plan. You immediately get a 7.5 Lakhs life cover. As you pay the premiums regularly, your investment of 75000 x 15 years is invested in various market-linked funds and managed actively. Even at a conservative 8% return, you will receive an amount of 17.14 Lakhs at maturity.

In addition, the policy also allows you to partially withdraw a percentage of your money twice a year, after the first 5 years. However, as discussed, you can make the most of the plan by remaining invested for the entire policy term so that your money can reap the benefits of compounding.

Max Life Shiksha Plus Super (UIN: 1041084V01) is a Non - participating Unit linked Insurance Plan

Life insurance coverage is available in this product. In this policy, the investment risk in the investment portfolio is borne by the policyholder. The linked insurance products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in linked insurance products completely or partially till the end of fifth year.

Unit Linked Insurance Products (ULIPs) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Max Life Insurance is only the name of the insurance company and <Product Name> is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects or returns.

 
 
 

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