Even though inflation may be down to zero, an average Indian household's expenditure is climbing at a feeling of great peace. The cost of education is already peaking and is rising at 12% every year. Currently, the average course fee of a BTech student is ₹6 lakh. The cost will only increase in the upcoming years, and by 2027, it will touch a whopping ₹24 lakh. Now, with the current scenario, Indian parents are worried about their child's higher education. The question of whether they will be able to fund their child's education remains unanswered. Well, they can if they plan in the right manner with the right approach. The best and the most obvious thing you can do is begin to save from an early life stage.
By starting to invest in life insurance, you can save a big sum of an amount and gain the power of compounding. When you invest in the best monthly saving scheme, you yield good results at the end of it. Having an early start is not always enough. You should also know where to invest right to receive the optimum returns. However, a delayed start in investing for your child's education will not only yield a small sum of money but will also impact your other financial goals. You're likely to fall short of the required amount if you begin the investment in your 40s. To understand this better, let us walk through the best monthly saving schemes.
What is a Child Insurance Plan?
You cannot overstate the value of good education. A child cannot reach his/her full potential without quality education. Moreover, the regular hike in education can be the cause of impediment in higher education. However, if you invest in a child education plan, it will ensure your child's education's financial aspect. The child education plan is a combination of insurance and investment. Some part of the plan is for providing the financial security of the insurance, and the balance is an investment in market instruments.
Child Insurance plans are a part of child-specific financial policies, which mostly includes child education plans. The plans focus on paying the life cover as a lump sum amount during the end of policy duration. Apart from the lump sum payout, the plans also come with regular payments during a child's education's important milestones. Generally, the child insurance plans can be customized as it comes with several options to add various riders. It thus improves the plan according to the child's specific requirements.
Now, let us talk about the various features of child insurance plans:
You can pay the premium as a lump sum at the beginning of the policy or in a specific period. The bank will give you multiple options to pay the premium: monthly, quarterly, half-yearly, and annual basis. The premium amount is dependent on the assured sum and the expected returns.
Typically, the policy tenure of a child insurance plan varies from 5 to 30 years. You can select the tenure from the birth of your child to a predefined age.
Besides maturity benefits, child insurance plans provide a life cover. According to the general thumb rule, the assured sum should be over ten times the annual income.
It is the most important feature. Since child insurance plans are invested in keeping a particular goal in mind, it will defeat the policy's purpose if the maturity amount falls short. Thus, while investing, you should consider various factors like interest rates and inflation.
The segmented payouts will take care of the child's financial needs, such as education when required. For example, the Canara HSBC Oriental Bank of Commerce Life Insurance gives the option of receiving the maturity amount in instalments, and the policyholder chooses the frequency.
Premium Waiver benefit
On the off chance that the policyholder passes away in the stipulated time, the beneficiary will receive the sum assured. The insurance company will continue to pay the rest of the premiums till maturity.
Child Insurance Plans have multiple riders. The child plan covers the illness, premium waiver option, and accidental death cover. The premium waiver option is sometimes an in-built feature of child insurance plans. The critical illness cover secures against a particular set of terminal diseases, and the accidental death cover gives an additional amount in case of accidental death of the policyholder.
Partial Withdrawal Clause
This feature is provided with the child insurance plans to manage the sudden requirement for liquidity.
Choice of Funds
A part of the premium of the child insurance policy is used as an investment in market-linked assets. The insurance company allows the policyholder to opt from different funds. The funds are invested in debt, equity, or money market instruments.
Types of Child Insurance plan offered by Canara Oriental Bank of Commerce Life Insurance:
This plan is complete protection and saving centric. This Unit Linked Insurance Plan offers you the opportunity to save for your future goals and dreams. It also provides you with a choice to opt for protection as per your suitability. It maximizes your savings by adding Loyalty Addition and Wealth Boosters, which returns the Charges of Mortality on policy maturing. Invest 4G is a savings cum protection plan that can help you secure your life goals.
Smart Future Plans
This plan is a unit-linked insurance plan providing you investment opportunity for the long term to fulfil various family needs, such as ensuring a bright future for your young ones or gathering assets. This is a comprehensive insurance cover that implies that there is the sum assured on death and Premium Funding benefit on death or disability. It ensures that the plan you selected for your family remains unaffected even if any unfortunate incident takes place.
Jeevan Nivesh Plan
Every person works hard to provide our loved ones with the best things in this journey of life. In this case, it is your child's education. To fulfil it, you need to structure your financial planning. To stay prepared, you can invest in the Jeevan Nivesh Plan.
Future Smart Plan
It is a unit-linked insurance plan that will provide the parents with a long term investment opportunity to build a bright future for their child. In case of any unfortunate event, the insurance will comprehensively cover everything to ensure your child's future stays unaffected.
Money-Back Advantage Plan
You should be financially empowered during every sphere of life, and in this case, it's your child's education. The Money Back Advantage Plan will provide financial help to your child by offering life cover and the milestone based on payouts via guaranteed money back payouts and maturity benefits.
Smart junior plan
With the Smart Junior plan, you can benefit from guaranteed payouts in the last five years of the policy. You can rightfully align it with your child's education pivot points. Moreover, the plan also gives you an annual and final bonus on maturity, if applicable. Also, the plan gives your child comprehensive protection if any unfortunate incident happens with life assured.
Why do you need a Child Insurance Plan?
There are three basic reasons you opt for the best monthly saving scheme for your child's education. The reasons are as follows:
Many people think of figuring out a proper plan for their child's education but many fail. A good child education plan helps you figure out your expenses like business ventures or your child's marriage and makes budgeting easier.
This plan offers you the opportunity to invest in your child's future, i.e. for a long period. Factors such as a long policy term and flexible premium payment tenure make it easier for you to invest in this insurance plan.
As education's expense keeps increasing exponentially, it is important to choose a child education plan that keeps you financially secured when your child applies for higher education.
Protection even after death
The situation of your child's dependence on you will not change soon. Thus, the child insurance plans provide death cover that will keep your child's education continued.
Lastly, let us brief you about the eligibility criteria of the child insurance plans.
The eligibility criteria of the child insurance plans vary from company to company. However, they are broadly similar. The entry age starts from 18 and goes till 65, and the maturity age lies between 23 to 80 years. The minimum amount starts from ₹5,000 per month, and it is ₹50,000 per year. The tenure of the plans is between 5 to 30 years. However, it is advised to invest for a short time, since it adversely affects the returns.