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How to use an online savings plan to secure your child's education fund?

dateKnowledge Centre Team dateFebruary 16, 2021 views149 Views
How to use an online savings plan to secure your child's education fund?

Everyone wishes to give good education and a decent life to their children. However, the mounting education costs have made the importance of financial planning clear. An official survey shows how the cost of education has risen from ₹335 per month for secondary school to ₹576 for higher secondary per student in the last few years.

The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment.

Therefore, it is smart to invest in the best saving scheme and secure your child's future. Investment in a child insurance plan, as soon as possible in life, can help you gather significant sums to cover the soaring education expenses today. It is vital to choose the best savings policies for your child only after thorough understanding and research.

Choose the best savings plans to build your child's educational fund

  • Take a high sum assured policy

    While choosing an online savings plan for your child's education, you must opt for an insurance policy, in which the amount assured is ten times your current gross income. Moreover, you must select a plan where the returns are enough to beat inflation. Canara HSBC Oriental Bank of Commerce Life Insurance offers a guaranteed sum, along with additional final bonuses upon the policy's maturity.

  • Look for additional benefits

    Most savings plans come with additional charges over the premium amount, which unnecessarily increases the cost. However, Invest 4G by Canara HSBC Oriental Bank of Commerce Life Insurance has low administrative charges that make it an all-rounder. The savings policies give benefits like wealth boosters and loyalty additions, which reduces the final cost of the policy.

  • Select a plan that offers premium waiver benefits

    It is necessary to ask an insurance company if their child insurance policy has a waiver feature or not. Most companies waive off the leftover premium in case if the parent dies within a specific time limit. In such cases, the sum assured is paid to the beneficiary. If you opt for a policy like that, you can obtain an ample amount for your child's education if any tragedy happens.

  • Take advantage of the partial withdrawal feature

    Different child insurance policies offer distinct features. Therefore, when selecting the best saving scheme for your child's education, opt for an insurance policy that allows partial withdrawal of funds. In this type of plan, parents are allowed to partially withdraw the fund value from savings plans to meet emergency needs. With the Canara HSBC Oriental Bank of Commerce Life Insurance's Guaranteed Money Saving Plan, you can opt for life insurance with savings plans. And, you can pay the premiums only for a limited time too.

  • Research about the policy term and premium amount

    Selecting an insurance policy that matches your requirement is necessary. Therefore, you can select the duration of a policy based on the education timelines of your children. For example, if your kid is 10-11years old and you want to secure a sum for their college education, you can opt for a policy term that is 5 or 7 years to ensure you have enough funds at your disposal.

  • Opt for additional riders

    Most insurance companies allow you to modify your child insurance policy by opting for add-on riders like critical illness rider benefits, accidental death and disability benefit, waiver of premium, etc. You can select a suitable one to improve your online savings policy.

Now, to secure your child's education expenses accurately, having a sound investment strategy is extremely valuable. You can plan to diversify your investment across various financial instruments. Doing so will ensure that, even if you don't get the returns you expect from some of your investments, others will give you the ROI you anticipate. In this way, you can reduce risk by investing in a safer option when you plan your long term investment strategies.

So what is a better solution for you?

You can invest in a child insurance policy and remain stress-free for years to come

Types of online savings plans for your children

Here are some of the best saving policy plans for your children's educational dreams.

  • Equity-linked insurance plans

    First of all, Unit Linked Insurance Plans (ULIPs) uses a part of your premiums to provide an insurance cover, and the remaining goes in market-linked securities like equities. These plans are the best plan for your child's education if you have a period of ten years. Invest 4G is the best among the Canara HSBC Oriental Bank of Commerce Life Insurance's ULIP options. The best thing is, you can customize as per your goals and requirements. The minimum entry age is 0 & the maturity time is 18 years. Plus, the maximum entry age is 65, and maturity is 85 years for this policy.

  • Traditional child endowment plans

    In case you are interested in a shorter insurance period than ten years and have a low-risk appetite, then the best to opt for an endowment insurance policy. These policies allow you to build up your savings over time and then acquire a lump sum at the policy's maturity. However, these plans don't offer high financial returns, unlike ULIP, but you will still have sufficient insurance for your child's future.

    Today, a strong educational background is critical to your child's secure future. With proper education, they can find new opportunities and become successful. However, tuition fees & education costs are only going to rise. While the average per capita income in India is Rs 10,500 per month, an average amount of Rs 63,280 per year is required for an engineering student. The amount is humongous.

    This is the reason why preparing for these expenses now can help you manage the costs of securing a bright future. Besides, opting for a child insurance plan can also provide much-needed benefits. You can consider Canara HSBC Oriental Bank of Commerce Life Insurance's savings plans for a child and financially stabilize your child's educational fund. Take a look at the benefits you will get from the best saving policy.

Advantages of child savings plan

  • A handsome amount for future education

    Best online savings plans like Invest 4G help you secure money for your child's education. The lump-sum amount of the policy that you get covers the future education expenses without any financial burden. On maturity & if the premiums are paid on time, you will receive the Fund Value based on the prevailing NAVs. You can choose to take the Fund Value on maturity in periodic installments (based on Settlement Options) as well.

  • An emergency fund for your child

    The best child plan will allow you to withdraw funds from time-to-time. In need, you can use this money to cover any unexpected or emergency expenses of your child like an accident, medical treatment, disability, etc.

  • Financial aid in your absence

    Child online savings plan that waives the premium amount left in case of your death before the policy maturity is the best. Now, this ensures that your child has adequate financial help and does not suffer any financial distress when you are gone.

  • Tax benefits

    According to the Income Tax Act of 1961, the person under Section 80C and Section 10 (10D) gets the tax benefits. However, the benefits may change as the Income Tax Act is amended from time to time.

Now that you know the advantages, what more can you do as a parent?

Choose child insurance plans that work

Life insurance schemes can help meet your child's educational needs, which may be impossible to cover in the absence of insurance. It is estimated that an engineering course that costs around Rs 6 lakh now will cost around Rs 15 lakh after a few years. Therefore, take a look at the policies you can invest in.

  • Invest in Smart Future Plans, which provides a long-term investment opportunity. With Sum Assured on death or disability, this policy guarantees that your plan for your family remains unaffected, even after any unfortunate event.
  • You can also opt for the Future Smart Plan, which provides a long-term investment opportunity as well.

Start by insuring yourself now!

No matter how you are trying to make your financial strategies work, insuring yourself against life's uncertainties is vital. Canara HSBC Oriental Bank of Commerce Life Insurance policies acts as the second roof for your dependents.

To conclude, if you start investing in reliable insurance plans when your child is still a toddler, you won't be worried if you are expecting a hefty expense when your kid is old enough to go to college. Taking small steps now can help you to help your children achieve their dreams in life.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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