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Tuesday, July 10, 2018

Why You Need a Child Insurance Plan For Your Child's Education?


Why You Need a Child Insurance Plan For Your Child's Education?

The joys of becoming a parent are well known, and so are the responsibilities. A parent always wants the best for their child, no matter what the cost. Parents want to give their child everything, including the things they never had the luxury of getting. A bright future is envisioned, and to achieve that a proper child education plan along with sufficient funds are required.

A bright future for the child is not possible without a proper, sound educational background, which is getting increasingly expensive. Parents have realized that quality education for their child is next to impossible if best investment plan for child is not undertaken. This is where a Child Insurance Plan comes in to the picture. Let us learn more about them.

What is a child plan?

A child plan is a life insurance plan, that allows parents to invest periodically so that they are able to build a corpus for meeting the future financial requirement of the child such as higher education, marriage etc. On the plan reaching maturity, the maturity benefit is paid to insured.

But, if the policyholder passes away before the plan achieves maturity, then the death benefit is paid to the nominee. Furthermore, the insurance company takes it upon itself to pay the premium for the remaining term, and on reaching maturity, the maturity benefit is also paid out and the child insurance plan terminates.

Why is it required?

The cost of education has risen dramatically in the last decade. Thanks to inflation and other factors, the amount required for a particular course has risen alarmingly. Let us take the example of IIM-Ahmedabad for instance. The premier B-school in the country will charge the 2018 batch Rs. 19.5 lakh for the two-year course. 

To put things into perspective, the same course cost Rs. 4.87 lakh in 2007. Now, – and this is why child plans are required – assuming that the cost continues to increase by an average of 20% annually, the same two-year course will cost Rs. 95 lakh by 2025. From this example we can understand the need of having best investment plan for children.

Child plan benefits..!
There are many benefits that come with opting for a child’s plan. The first one is that it ensures that your child’s future is secured, even if something happens to you. It allows you to plan ahead and gives you the freedom to choose flexible pay-out options as per your requirement and gives guaranteed benefits too.

Moreover, the premiums that you pay towards the plan helps you in tax planning as they are exempted from tax under Sections 80C and 10(10D) of the Income Tax Act. But the best benefit is the peace of mind that a parent gets in knowing that no matter whatever happens, their child’s future is in safe hands.

A word of caution..!

A child insurance plan mostly has an appointee, who will take care of the claim amount in the unfortunate event of the parent’s passing while the child has not reached a mature age. This appointee must be carefully selected and should be someone with whom you have a strong, reliable relationship. 

This person must be trustworthy and even wise, so as to not exhaust the money even before the child has reached the age where he/she will need it the most. Therefore, it is crucial that you take your own time and be extremely careful while selecting this person for the child insurance plan.


Investing in a child plan is wise move on the parent’s behalf. It ensures that the child’s future is secured and also gives the parents the peace of mind that their child’s financial needs are taken care of, even in their absence. 


Why You Need a Child Insurance Plan For Your Child's Education? Reviewed by S. Chitra on July 10, 2018 Rating: 5 Why You Need a Child Insurance Plan For Your Child's Education? The joys of becoming a parent are well known, and so are the respo...

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