What is a Child Education Plan?
I am sure you agree with us that parenting comes with some responsibilities for your child, along with the immense happiness that the moment brings into your life. That is why you are here: to read this detailed study and make your child’s future secure and better, and we really appreciate your decision. Successful parenting is not easy by any means, and it does not stop with just the birth of your child. Parenting involves nurturing your child into a better person and providing them with enough resources to complete the highest level of studies he or she desires.
This is where Child Education Plans, or “Child Plans,” come into play, and it is also very important to choose the best Child Education Plan among many that suits your individual needs. They often come in combination with investment and insurance policies. This is a strategy that allows parents to save for their children’s higher education while additionally providing financial security to the child in case of the parent’s untimely death (as there is no certainty in today’s world especially after the pandemic)
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We know that, as a parent, you want to give anything and everything to your child and can go beyond your limits to see a smile on your child’s face, but the best gift that you can ever give your child is a bright future, and that begins right now with the birth of your child. You have to start your financial planning now, and what better than a Child Education Plan?
Types of Child Education Plans
There are different plans, and we are sure one is made for you. Let’s take a look at the different plans:
- Single Premium Child Plans: All individuals are different and so is there style. If you like to pay only a one-time premium and do not want to take the tension of paying the premium monthly, quarterly or yearly then this plan is for you. Pay once and sit back and relax.
- Child ULIP: It has multiple advantages. You will receive a lump sum amount at the end of the policy that you can utilize for your child’s higher education. The major feature or you can say a feature that makes it different from other plans is that you get the maturity amount when the child turns 18. It is important for a child’s financial security in case of any mishap with the parents.
- Regular Premium Child Plans: If you do not want to pay the premium in one go and want to divide the payment in small amounts over a period of time, then this plan is perfect for you. You will get the freedom of paying your premium quarterly, half-yearly, or yearly.
- Child Endowment Plans:
So, pick the best plan for you. It is advisable to take the advice of an expert who already uses this product as part of their investment strategy. What better than WC Securities Pvt. Ltd., who already uses this strategy in their investment strategies?
Advantages and Disadvantages of CEP
Let us start with the Advantages:
- Maturity Benefit to meet Higher Education Needs: Every parent wishes their child to get into a good institute and take up the best professional courses to be doctor, architect, etc. However, the fees for these courses are becoming unaffordable day by day. You even have to take an education loan to meet your child’s education needs. So, it is advisable, to start investing in a good child plan at an early age, so the corpus amount at the time of maturity will be adequate to meet the fees of your child’s course.
- Avoid Capital Erosion: Markets are volatile and sometimes it can lead to capital erosion. Child Education Plan is one tool that gives you freedom in fund selection and Systematic Transfer Plan or STP to plan your investments as per expected returns required during different stages of your child.
- Accidental Rider Benefits: If you choose the best Child Plan that gives you rider benefits then you can get the advantage of getting your entire premium waved off to be paid during the policy tenure if the insured person passes away. We know this is not a thing to discuss, but still, in your heart you feel you have done your part and saved the amount needed for your child’s higher studies.
- Partial Withdrawals: If you choose the best Child Plan then they will give you the flexibility of partial withdrawals from the child education plan. Also, certain plans come with periodic pay-outs too that can be helpful to meet expenses while fulfilling your child’s talent career further.
Let’s learn about some Disadvantages too:
- Low Life Cover: The life cover provided by Child Education Plan is limited to like 10 times the annual premium. So, for an annual premium of Rs. 60,000 the life cover offered by Child Plan is Rs. 6 lakhs.
- Premium Paid is Divided: This means the whole premium paid for the Child Plan is not invested in the Child Plan only. It is divided between Child Education Plan and providing Life Cover to the insured individuals. So, for this reason, the total maturity amount from the Child Education Plan is greatly reduced.
- Limited Investment Choices: The investor has limited options for investing their money especially when they opt for child ULIP. The investment choices are limited to a small number of funds. In the case of Child Endowment Plans, it is the policyholder who decides the asset classes where the investments will be made, so again the insurer has limited freedom to put his opinion regarding in which investment instrument the investment should be made.
- Limited Flexibility: Child Education Plans usually come with a lock-in period of 5 years. During this lock-in period no withdrawal can be made. After the maturity, it is up to the policyholder to continue or withdraw the amount. Once you start the policy, it is not possible to alter the policy. This is the biggest drawback.
Why do you need a Child Education Plan?
- If you are looking to secure your child’s future
- If you want a life cover at a low cost along with a wide variety of investment options
- If you want the tax benefits associated with Child Education Plans
The Bottom Line
The most important benefit of a Child Education Plan remains your child’s secure future. We will not be around children forever, and this is the harsh reality. Also, diversifying your portfolio is important, and the Child Education Plan should be a part of your strategy to not only secure your child’s future but to have an increased ROI at the same time and reach your goal of wealth creation for your child’s higher education expenses. If you still have any doubts or if you are ready for the investment in your Child Education Plan, either way, WC Securities Pvt. Ltd. will help you choose the best plan for your child as they have more than two decades of experience with 1000+ Crores in AUM, 2000+ Happy Clients, and 20+ products, including the Child Education Plan.