Investing in your child’s education is not just a financial decision; it’s a commitment to their future success. In this article, we delve into the best Child Education Plans Online at PolicyBachat, where strategic investments cover the way to academic success and lifelong prosperity. Let’s explore the key elements, benefits, and strategies that ensure a solid foundation for your child’s academic journey and beyond.
What is a Child Education Plan?
A Child Education Plan is a type of child plan designed to assist parents in saving and investing in their children’s education. These plans are structured to provide a financial corpus at key milestones in a child’s educational journey.
Child education plans include an insurance component to provide financial protection for the child if the parent dies during the policy term. The plan often offers flexibility in payout options (monthly, half-yearly, yearly or single) and may come with tax benefits to encourage parents to plan for their children's education systematically.
Once the policy term ends, you receive a lump-sum amount called the Maturity Benefit. In case of an unfortunate event during the policy term, the company offers a life cover amount to the designated beneficiary. The company also waives the future premium payments for the remaining policy term to ensure that your children’s future is always secure.
Why Buy a Child Education Plan?
Buying a child’s education plan can be a strategic and financially prudent decision for several reasons. These plans are designed to help parents save and invest in their child’s education expenses. Here are some key reasons why parents might consider purchasing a child education plan:
- Financial Support in Emergency Situations
- Addressing the Rising Costs of Education
- Providing Security for Obtaining Education Loans
- Safeguarding the Future of Your Child
- Potential Returns on Investment
How Does Child Education Plan Work?
Child Education plans provide a combination of life insurance coverage and an investment component. Here is an example case scenario on how child education plans work.
| Policyholder |
Mr Satish |
| Child |
Anil, Age: 1 Year |
| Policy Term |
15 Years |
| Premium Payment Term |
10 Years |
| Premium Payment Frequency |
Monthly |
| Investment Amount |
Rs. 23000 per Month |
| Sum Assured |
Rs. 25 Lakhs |
| Rate of Return |
Based on Policy and Market
Ex: - 8% |
Death Benefits:
If Mr Satish passes away during the policy term, the sum assured of Rs. 25 Lakhs will be paid out to the nominee (Anil).
Maturity Benefits:
At the end of the policy term (15 years), the plan matures, and the maturity benefit is paid out. In this example, the total Maturity Amount is Rs. 45 Lakhs (Approx.)
Benefits of Child Education Plans
Child Education Plans offer several benefits for parents who are looking to secure their children’s education financially. Here are some key benefits:
- Structured Savings: Child Education Plans provide a disciplined and structured way to save money for a child’s education. Regular contributions ensure that a corpus is built over time, helping parents meet educational expenses without financial strain.
- Insurance Coverage: Many Child Education Plans come with an insurance component. In the unfortunate event of the parent’s demise during the policy term, the insurance coverage provides financial protection for the child. This ensures that the education fund remains intact, and the child’s education is not compromised.
- Waiver of Premium: In the event of the policyholder’s demise or disability, Child Education Plans offer a waiver of premium feature. This means that future premiums are waived, ensuring that the policy continues without the financial burden on the child.
- Partial Withdrawals: Child Education Plans may allow for partial withdrawals, enabling parents to access a portion of the accumulated funds in case of unforeseen financial requirements or emergencies.
- Loyalty Additions: Some plans offer loyalty additions or wealth boosters, which are additional benefits provided for maintaining the policy for a certain duration. These additions enhance the overall corpus, providing an extra financial cushion.
- Flexibility: Child Education Plans typically offer flexibility in terms of premium payments, allowing parents to choose between monthly, half-yearly, or yearly contributions based on their financial preferences.
- Tax Benefits: Contributions made towards Child Education Plans are often eligible for tax benefits under Section 80C of the Income Tax Act. This provides parents with an additional incentive to invest in these plans as a tax-saving instrument.
Tax Benefits under Child Education Plans
Tax Deduction under Section 80C:
Premiums paid towards a child’s education plan are eligible for a deduction under Section 80C of the Income Tax Act. The maximum deduction limit under Section 80C is Rs. 1.5 lakh per financial year for all eligible investments and expenses.
Tax-Free Maturity Proceeds under Section 10(10D):
The maturity proceeds from a child education plan are generally exempt from income tax under Section 10(10D) of the Income Tax Act. This means that the amount received on maturity or surrender of the policy is tax-free.
Tax Benefit on Death Benefit:
In the unfortunate event of the demise of the policyholder, the death benefit paid to the nominee is tax-free under Section 10(10D). This provides financial protection for the child in case of the policyholder’s demise.
Child Education Plans Comparison in India
When buying a child insurance plan, it’s crucial to compare various factors to ensure that the chosen plan aligns with your financial goals and provides adequate coverage for your child. Here are key factors to compare:
- Premiums
- Sum Assured
- Policy Term
- Maturity Benefits
- Coverage and Riders
- Investment Component
- Premium Waiver Benefit
- Flexibility in Payout Options
- Exclusions and Limitations, etc.
Compare Child Education Plan with Sukanya Samridhi Yojana (SSY) and PPF - Which One Is Best?
| Feature |
Child Education Plan |
Sukanya Samriddhi Yojana (SSY) |
Public Provident Fund (PPF) |
| Objective |
Save for child’s education |
Save for girl child’s marriage/education |
Retirement savings can be used for education |
| Eligibility |
Parents or legal guardians |
Parents or legal guardians for a girl child |
Any Indian citizen |
| Maximum Age for Account Opening |
0 to 17 years |
Girl child age: 0 to 10 years |
No age limits |
| Maturity Period |
Typically, 15-25 years |
21 years from the date of account opening |
15 years (can be extended in blocks of 5 years) |
| Maximum Investment Limit |
No fixed limit (varies among plans) |
Rs. 1.5 lakh per financial year |
Rs. 1.5 lakh per financial year |
| Interest Rate |
Market-linked or fixed |
Fixed |
Fixed |
| Tax Benefits on Investment |
Deduction under Section 80C |
Deduction under Section 80C |
Deduction under Section 80C |
| Tax Benefits on Maturity Amount |
Tax-free under Section 10(10D) |
Tax-free |
Tax-free |
| Withdrawal Rules |
Partial withdrawals may be allowed based on the type of plan |
Partial withdrawals are allowed after the girl child turns 18 |
Partial withdrawals allowed from the 7th year |
| Insurance Component |
Often includes a life insurance component |
No insurance component |
No insurance component |
| Flexibility |
Flexible premium payments |
Fixed contribution frequency |
Flexible contribution frequency |
| Purpose of Withdrawal |
Education expenses for the child |
Education or marriage expenses for the girl child |
Any purpose after the initial lock-in period |
| Risk |
Market risk is linked to investments |
No market risks |
No market risks |
The decision on which plan is best depends on individual financial goals, risk tolerance, and specific circumstances. It is recommended to compare plans to determine the most suitable option based on your unique needs.
How to Buy the Best Child Education Plan Online
The most effective way to buy the best child education plan online is through PolicyBachat. Here you can compare multiple insurance plans from various insurers in one place. This simplifies the process of finding the plan that best suits your needs. Below are the steps to compare and purchase the best child insurance plan online:
- Visit the official website of the PolicyBachat.
- Click on the Investment Plan tab.
- Fill in the requested details such as name, mobile number, and email address.
- Enter your age and city.
- Select the plan which you want to buy. Click on the Proceed button.
- Use the online premium calculator to compare the premium amounts.
- Compare benefits, features, returns, and additional riders or bonuses.
- After comparing the products, select a plan which suits your requirements.
- Then pay for your policy by using an online payment method.
Buy Child Plan Online
Wrapping Up
Choosing the best child education plan involves a thoughtful comparison, especially when considering options like Sukanya Samriddhi Yojana (SSY) and the Public Provident Fund (PPF). While SSY is specifically designed for girl children, PPF is a more general investment option. However, Child Education Plans from insurance providers offer a comprehensive approach, combining long-term investment with insurance coverage, providing the necessary financial support for a child’s education. The choice ultimately depends on individual preferences, risk tolerance, and specific financial goals. It is also important to carefully assess the features, benefits, and limitations of each option and compare plans to make a well-informed decision tailored to your family's needs.