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Planning for Child's future financial goals is a challenge, and few parents end up thinking of education loan as the savior. Education loan may be a good option, but it cannot eliminate the need for investment for the goal, as the child may need support in other areas as well. The very first confusion young parents face while planning for their child's future is 'what would he/she want to do?' While expenses for schooling and others can be taken care of with your regular income, higher education costs are a thing of another dimension. Since it is difficult to determine the future needs of the child, along with the hyper cost such as tuition fees, books, admission and more of career-defining education, which one would you choose - Education loan or Saving for Child's education (education plan).
Loan offers tax benefits and deferred payment freedom. Thus, if the child has sufficient income after education, he/she can take care of the EMIs. However, the loan to work, parents must be there to back the loan. Thus, investing for the goal of your child ambition cannot be done away with. Also, you must plan for the unfortunate events, and protect your kid's future from them. Child ULIP plans may be the answer to such unforeseen circumstances.
What is the difference between an Education Loan and an Educational Plan?
One Time Use
You can use the money from education loans only for financing your child’s education; however, if you were to plan to save for the future, it would take care of your child’s education and other contingencies too.
The Burden On The Child
Education loan lets your child study further with the condition of repayment of the loan amount in easy installment. It is on the assumption that your child will get a job and pay in the future, you agree to the loan. What if your child, for some reason does not get a job and is unable to pay the EMI.
Apart from these two factors that one can consider while opting to plan for one’s child’s education, there are other benefits of a saving cum investment insurance plan that not only gives the parents returns when they need it the most but also support the dependents of the insured in case of their sudden death.
If you are looking to invest or save in a child insurance plan that gives you return (as per the market conditions) and financial security for your child, ULIP is your friend in need. Here’s how you will breath a sigh of relief.
Coverage for your child’s future
You get overall protection for your family including your child. By paying an exact amount like that of your monthly loan EMI, you can protect your family.
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Options to Invest
With investment comes more money. Choosing ULIP plan, you can invest in corporate bonds, government securities, equity and a few more. If you plan for a longer duration such as 20 years, soon after you have completed 15 years, you can deviate the premium from equity to debts for refraining from the consequences of market fluctuations.
If your child is young and you died suddenly, your family gets an immediate death protection (Sum assured) amount.
In case of any need or emergency, you can withdraw a partial amount and leave the rest invested. It gives you the freedom to use your money without any stress, and you need not pay anyone in return.
Of course, how can we forget the tax benefit? As per the income tax law of India, you get tax benefits on investing in ULIP.
What is your choice?
Have you made up your mind yet? If you have enough, and you have no intention of multiplying it, you can go for education loan; however, the peace of mind when one saves and invest their hard-earned cash gives much relief to you and your family. In short, education plan or a ULIP plan is an ideal way to insure yourself and invest at the same time. Additionally, you gain financial securities for your child and meet their needs such as education cost, treatment cost and miscellaneous. Self-financing your child’s education and other needs is a moment of pride for you. You must enjoy it.