Child Education Plan

Child Education Plan: As parents, we think about the funds required for our children’s higher education and try to find out the best tool which can fulfill the financial aspects at the required time. In Insurance Industry, there are numbers of plans designed to fulfill the dreams of parents for their children education with guaranteed returns or without guaranteed returns.

There are Child Education Plans available in Insurance Industry, in both Traditional Participating Plan and Unit Linked Insurance Plan, per the choice of investor’s risk appetite and requirements.

If, we go for the Traditional Participating Child Education Plan, then the following benefits will be there for sure;

  1. Guaranteed Returns
  2. Risk Coverage
  3. Waiver of Premium – Rider, as inbuilt feature (depends upon the insurance company and product), but without this rider Child Education Plan may worthless.
  4. Bonuses will be there, as product is participating.
  5. It could be a mix product of Endowment Plan and Money Back Plan, to provide the best features in Child Education Plan.

 

If, we go for the Unit Linked Insurance Child Education Plan, then the following benefits will be there for sure;

  1. Returns may very high but not Guaranteed as Market involve there.
  2. Risk Coverage.
  3. Waiver of Premium – Rider
  4. Bonus will not there , but you will be free to choose the funds out of six available funds with the insurer, per your risk appetite.
  5. Partial Withdrawals will be there, with or without penalty, depends upon the policy age.

 

Points to remember while choosing the right child education plan for your little champ;

  1. WOP Rider should be there – WOP (Waiver of Premium) rider fulfills your dreams and duty towards the child future, even if you are not there. For Example, Mr X taken child education plan with WOP and passed away after 5 yrs, then his nominee will get Sum-Assured as death benefit, if any premium(s) is unpaid, will be waived off by insurer, rest plan will work as it was, means you will get all benefits including the maturity as per the original plan, which will help you to shape the future of your child, even you are not there.
  2. Policy Payment Terms should be as per the requirements.
  3. Policy Term (Maturity) should be before/on the time when you require money for the child future.
  4. There should be flexibility to choose policy payment term and policy term per the child age.
  5. Sum-Assured should be per your future requirements.
  6. Bonuses should be compounded to get extra monetary benefits at the time of maturity.
  7. Discounting and Deferment option should be there – to match the purpose of child education plan, you should have the flexibility of policy discounting and deferment to meet liquidation requirements.
  8. Money Back option should be there to match the timely requirements.

Above listed points are available in actual child plans, so be aware before going to finalize the child education plan, no other plan can fulfill your dream as can be in Insurance’s Child Education Plan.

Amit Saxena

Financial & Insurance Consultant
MaxLife Insurance Co Ltd & MaxBupa Health Insurance

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