The one thing on which the majority of Indian parents spend the most is their child’s education. Many parents also make financial sacrifices so that they can cover their kids' education costs. But the rate at which the education costs in India are rising is very alarming. If you want to ensure that your child receives the best education possible, be prepared to spend a significant amount of money or secure their future with a child insurance plan.
How to Build Adequate Corpus for your Child’s Education?
Building a good corpus for your child’s education is important, and not only that, you need to safeguard the goal as well. Here’s a list of steps you can follow to tackle the rising cost of education in India or abroad:
1. Check your Finances
Before making any plans, it is advisable that you first assess your current financial situation. To have a fair idea of where you want to go, you must have an idea of where you are right now.
Take a look at your current income and expenses, and the amount you have saved, if any.
You can prepare a budget. It involves listing all your income and expenses at once. It will help you assess where you can make more financial cuts and whether you can save more. It will also help you be disciplined.
2. Start Planning Early
The earlier you start planning to accumulate funds for your child’s education, the better it will be for both you and your child.
You should start by taking into account the most popular careers and their costs. This would give you an idea of how much funding you have to create.
Make use of the online calculators to get an estimate and make your investments.
In general, you should start saving and investing for your child the moment they are born. It will benefit you even more if you start planning before your child is born. The more time you have in planning, the greater the chances that your fund’s value will be high.
3. Purchase a Child Insurance Plan
After assessing your current situation and beginning your planning, you should be considering how to grow the necessary fund to cover the cost of education.To help with this, you should purchase a child insurance or child education plan.
A child education plan gives you an opportunity to invest in the market and earn good returns. Not only this, but a child plan also comes with insurance. It covers your life so that your child can still pursue his dream even after you're no longer present with him.
The best child education plans offer a unique benefit that safeguards your child’s future even in the case of your untimely demise. The premium protection option in the child insurance plan ensures that:
a) The investment plan continues as if you are alive.
b) The insurer pays any remaining premiums on the policy.
c) The family receives the life cover sum assured right after your demise.
d) The child will receive the maturity value as originally intended.
4. Avoid Withdrawals
Your funds grow best when they are left untouched. Investing regularly in your child's education plan and keeping it separate gives your fund the best chance to grow by taking advantage of the power of compounding.
Plans such as Canara HSBC Life Insurance’s child plans, Invest 4G and Smart Junior Plan, do allow you the facility of partial withdrawals. But you should avoid making these withdrawals unless it is absolutely necessary.
To meet any emergency that you may encounter in the future, it is advised that you maintain an emergency fund. Put a part of your salary into this fund and keep it with yourself or invest in funds that are liquid.
5. Keep Checking with your Plan
Purchasing the best child education plan is just the start of the road to securing a good education for your child. Many people make the mistake of buying a child education plan and then forgetting about it. You should avoid making this mistake. Constant review of the plan is a must. Checking with the plan at regular intervals can help you get to know the following.
a) Is your plan performing as per your expectations?
b) How are the funds that you have invested in performing?
c) Should you change your fund strategy?
So, if you check with your plan regularly, you can minimize your risks and can give the appropriate responses to market situations.
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Smart Junior Plan
To get started on this journey, you can consider buying child education plans such as the Smart Junior Plan from Canara HSBC Life Insurance. This plan provides guaranteed annual payouts for the last five years, which can assist you in meeting your educational expenses.You can align your plan in such a way that the payouts start by the time your child enters his education age.
For example, if your child is 5 years old, you can get a policy for 17 years. The payouts will start when your child reaches the age of 18. You can use these to pay for the annual fees.
This plan also has the premium waiver option. If you die during the plan, your child will receive the sum assured. The remaining premiums are waived off and the policy will continue as intended.Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.