Written by
Updated :
Reviewed by
As a kid, the story that you once narrated to your friends and family, “I will become a Doctor and serve humanity”, or “I want to be a Pilot and fly high”, or “I want to be a successful Entrepreneur”, has now become a reality for most of us. To achieve your dreams, you have put in a lot of hard work and sincerity and have accomplished the goal you set for yourself. However, there are a few of us who could not pursue our dreams because of the lack of money as education is an expensive affair.
Now you are a parent and your sole aim in life is to make sure your child gets the best of everything. Now it’s time to help fulfil your child’s dreams. Yes, your kid’s dreams are indeed worth millions, and we need to give them the freedom to choose their goals., To fulfil their dreams, comprehensive financial planning is a must, and you need to invest systematically in order to secure your child’s future. The first step is to start as early as possible because the early you start the investment, the beneficial it is.
There are various investment avenues available in the market now. However, child plans are specifically designed to fulfil your child’s dreams. Here are some more reasons why you should opt for a child insurance plan:
Help fulfil Your Child’s dream, even if they keep changing every year
It is not a child’s play to educate a child. Consider this— An MBA from a reputed college today can cost an average of Rs. 12-15 lakhs, Engineering can cost 2-5 lakhs per year (Approximately 10-20 lakhs depending on the college). Source: https://www.mba.com/india/plan-for-business-school/enroll-in-a-program/financing-your-degree/how-much-will-it-cost.aspx, https://collegedunia.com/engineering-colleges)But this cost may go up by the time your child grows up. Moreover, the dreams of your child may change – today they want to be an engineer, but 2 years later they say they want to pursue law – your savings could go for a toss if you do not plan well. Child Career plans are specially designed to meet the increasing educational and other needs of growing children and hence are better than other investment options. Child plans take into account inflation as well and ensure that money accumulated over a period of time can be used towards education needs or other financial needs of your child. In these plans, the money comes in instalments, and the lump sum payout comes only after the child has attained the required age which is when the plan attains maturity.
Get the money whenever needed, you don’t have to wait till maturity
Many child plans offer partial withdrawals at the various milestone stages of your child like attaining the age of 16, 18 or 21 where the child is on the verge of deciding his/her career path. These periodic payouts are usually a prefixed percentage of the sum assured and can be planned at various stages of a child’s life, to fulfil any short term or medium-term financial needs like tuition fee, 10th, 12th or preparation courses for entrance exams. Such payouts help reduce the parent's financial burden and allow to meet various education expenses and other needs of the child.
Don’t worry about future Premium Payments; they are waived off in case of a parent’s death
In the event of the demise of a parent, the insurer waives off all the future premiums, and the policy continues to offer the coverage till maturity. So, there is no cause of worry about future premium payouts as the child’s needs will be taken care of as planned by the parents.
Get Tax Benefits as well
Most of the Child plans available in the market offer tax benefits on the amount invested as per the prevailing tax laws. So, while you are saving for your child’s education, these plans give you tax benefits on premiums paid, and benefits received. Investment up to Rs. 1.5 lakh is allowed as a deduction from the taxable income under Section 80C of the Income Tax Act, 1961. Also, the amount received on maturity or at the time of death of policyholder is completely tax-exempt under section 10(10D) of the Income Tax Act, 1961.
Helps Facilitate Other Future Plans
A detailed and well-thought financial plan for your child’s needs like education or marriage will allow you to work on your other financial goals. When your kid’s education is taken care of by one of the best child plans, you can plan to focus on your retirement and wealth accumulation. The burden of massive education expense will not fall on you anymore as the child plan you have bought will take care of all the needs of your child, and so you can enjoy your retirement life worry-free. If you have made up your mind, this is what you need to do next
Before investing in a child plan, you must first calculate the actual corpus needed for your child’s needs and build a comprehensive plan for achieving this targeted amount accordingly. To know the exact corpus, one can take help of child plan calculators which are easily available online. These help you to calculate the precise amount needed to fulfil your child’s dreams by asking a few simple questions.
1. Input your current age and also the age of your child. Let’s assume your age is 32, and your child’s age is 0 (a few months)
2. Input the desired education qualification and state the corpus for the desired education. At this time, you may not be sure about what your kids will eventually become when they grow up, so it is advisable to keep a buffer. State the age of the child at which the desired corpus is required. Let’s suppose this is 21
3. Mention the Inflation rate without fail and state the growth rate of your investment. The calculator will provide you with the investment amount and the number of years to reach your corpus goal. In the above example, it will be 44,516/year. So you invest Rs 3709 per month, for the next 21 years to reach the corpus of Rs 20 lakhs.
Money shouldn’t be a barrier to your kid’s dreams. Planning to fulfil your children’s dream is essential and empowering them with child plans is a wise thing to do. To reap the maximum benefits, start early and create a sustainable future for them to bloom in.
Max Life offers some of the best child plans to cater to your child’s needs. You can choose as per your needs and goals and can start with your monthly investments now. So, no waiting and start investing!
Disclaimer: Tax benefits are in accordance to prevailing provisions of section and subject to fulfilment of conditions mentioned therein. Policyholders are advised to seek tax consultants view for more clarity.
ARN:- Jul21/BG/19
