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Child Education Plan

The best gift parents can give their children is a sound education. Education is an investment which pays the best dividends. The roots of education run deep and its fruits last a lifetime. Therefore, Children's Education Planning is an important responsibility of parents. It calls for proper financial planning. To provide the best education for children, you will have to spend a lot of money. Education is no more cheap. Forget studying abroad, studying in India too is very expensive.

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Concepts & FAQ's Children Education Planning

What is Children's Education Planning?

Children's Education planning involves making plans for the career growth of a child well in advance. The process involves planning the cost of education at current rates and then considering the inflation factor of quality education. Food and accommodation expenses need to be planned along with the college education.

Features and Benefits of Children’s Education Planning:

A quality education is the best gift parents can give their children.
Education is an investment which pays the best interest.
To provide the best education for children, you will have to spend a lot of money. Planning for child's education should begin when the child is young. This gives sufficient time to collect money for their education.
With Children’s Education plans, funds for education are set aside. So, parents will not have to compromise on providing quality education to children.
Education plans are eligible for Tax benefits.

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Hello friend! I am your personal financial advisor. By the end of this interactive session, I will help you to plan yours and your family's finances to ensure a better future.

Why Children Education Planning?

Child's Education:

Parents need to provide quality education for their children. Education being expensive, children education planning is a must.

Rider Benefits:

Avail waiver of premium rider to ensure that the child gets a good education, even if parents are not around.

Tax Benefits:

Premiums paid towards Children’s Education Plans are eligible for tax deductions. The amount received on maturity of the plan is also tax-free.

Investment options to plan for a Child's Education:

1. SIP (Systematic Investment Plans):

A popular investment option is a Systematic Investment Plan in mutual funds. A small sum is set aside each month which appreciates steadily and over time gives returns sufficient to cover the college expenses of the child. It is very important to shift the corpus to a debt instrument, 3 -5 years before the intended goal or target date of the child's college education.

2. Public Provident Fund (PPF):

Public Provident Fund opened in the name of the person as well as the child is a commonly followed practice. This investment is risk-free and enjoys tax benefits. Financial Planning for Children's Education using a Public Provident Fund needs to be started when the child is still young.

3. Children Insurance Plans:

Children Insurance plans are unique and one of a kind. These may be Endowment plans or Unit Linked Insurance Plans (ULIPS). Just like other Insurance Plans, premiums are paid on these plans too. Maturity benefits are paid on the maturity of such plans.

Under Endowment Plans, investment is made in debt instruments and the returns are limited. The bonus accrued is given to the investor. This is a twin benefits plan giving: Insurance + Savings

The parents of the child are the proposer of the Child Endowment Plan. The proposer is also the life assured in the policy. The policy is taken on the life of the proposer in a Child Endowment plan. The proposer has to pay the premiums towards the Child Endowment policy. Higher the premium, higher is the sum assured you get in a Child Endowment plan.

If the proposer/parent dies, then the children get the money for their education (sum assured is paid). But, the plan doesn’t end here. The insurer then funds the policy by paying the remaining premiums. The child endowment policy matures when your child is 18-21 years of age. When the Child Endowment plan matures, the insured gets a second guaranteed lump sum amount which can be used for children's education. This plan is great because of the twin-payouts.

Under a Unit Linked Insurance Plan (ULIP), 100% of the amount can be invested either in debt or equity depending on the risk appetite of the investor. Unit Linked Insurance Plans (ULIP) gives higher returns than Endowment plans. An investor can opt for either of them and even switch between them. ULIPS have a compulsory 5 year lock-in.

Waiver of the premium rider in the Child Endowment plan:

You must opt for a waiver of premium rider in a Child Endowment plan. A rider is an additional benefit that can be obtained by paying a slightly higher premium.

If the parent dies before the plan matures, a death benefit is paid out immediately. The uniqueness of this plan is that all the future premiums are waived off and are paid by the insurer. On maturity of these plans, a guaranteed lump sum amount is paid out. The payout happens at two stages: one on the death of the parent and another on the maturity of the policy.

Eligibility Criteria for Child Education Plans:

The entry age to buy a child education plan varies from insurer to insurer.
Entry age is 0-17 years for child and 18-57 years for the proposer.

Factors to consider when availing the best Children’s Education Plan:

While taking a Children’s Education plan, parents should make sure they consider the following features:

Affordable premiums
Flexible plan which helps to gradually increase savings for the future.
Opt for the pay or benefit rider
Adequate Sum required for the Child’s Higher Education Costs
Rider Benefits like Health Insurance, Accident cover.
Competitive Pricing and Returns
Assured amount for Children in case of Parents Death
Claim settlement ratio of the insurer
Amount of money to set aside for the child’s education
Less administrative Costs.

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Children Education Planning Articles

Read Article

Girl Child Education Plan with Sukanya Samriddhi Yojana

08 May 2018, Tuesday

‘Beti Bachao, Beti Padhao’ is an excellent campaign with a cause. It was initiated by the Government of India, headed by PM Narendra Modi. In January 2015, a small savings scheme called ‘Sukanya Samriddhi Yojana’ (SSY) was launched. It aims to create awareness on th ....

Why Child Endowment Plan?

14 November 2014, Friday

Education is the only way to ensure your child a bright future. Quality education costs money .This is where you need a child endowment plan.In this article you will learn how child endowment plans helps your child get the money needed for a good education. What are child endowment plans? A child endowment plan works in the same way as an endowment plan A child endowment plan has twin benefits - Insurance + Savings The child endowment plan can be taken by you (parent), your ....

Waiver of Premium Rider in Child Endowment Plan

02 July 2015, Thursday

Your children’s education is your responsibility. Your children need to be educated even if something untoward happens to you. This is where you must consider a Waiver of Premium Rider in Child Endowment Plan. What is a child endowment plan? This is a twin benefit plan giving you: Insurance + Savings You (The parent) of the child are the proposer of the child endowment plan. The proposer is also the life assured in the policy. The policy is taken on the l ....

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Children Education Planning News

Home News

Kejriwal seeks report on school girls 'lock up' case

Wednesday, July 11, 2018, 6:21 PM

Delhi Chief Minister Arvind Kejriwal on Wednesday sought a report on the alleged locking up of 16 girls in the basement of a school for not clearing their fees. Police have registered a case against the school authorities and an investigation is underway. Denying the allegations, the headmistress claimed the basement was used as a play area for students.

Over 10,000 children killed, maimed in conflicts worldwide

Thursday, June 28, 2018, 9:52 AM

More than 10,000 children were killed or maimed amid armed conflicts worldwide in 2017, while others were raped, forced to serve as armed soldiers or caught in attacks on schools and hospitals, a United Nations report said on Thursday. A total of more than 21,000 violations of children's right were reported in 2017, according to the annual "Children and Armed Conflict" report.

JLR declines by 2.3% in retail sales

Wednesday, May 10, 2017, 1:10 PM

Tata Motors-owned Jaguar Land Rover (JLR) reported 2.3% decline in retail sales of 40,385 units in the month of April. JLR sold 219,891 vehicles in the first four months of 2017, up 9.9% compared to the same period a year ago. Jaguar had a record April, retailing 12,310 vehicles, up 54 % compared to the same month in the previous year.

Children Education Planning Education

Home Education

#3. Gold Saving

Wednesday, April 11, 2018, 12:35 PM

You can invest in gold for a child of yours. But, do not do it through physical-gold. The best option would be the gold ETFs, because there is no locker and other storage charges. Also, you can invest in the electronic form and there is no worry of theft. Gold has generated much better returns than most asset classes in the more long term.

#2. Sukanya Samriddhi Account

Wednesday, April 11, 2018, 12:29 PM

Another good scheme to invest and which can help build a corpus for your child's education and is an excellent child investment plan is the Sukanya Samriddhi Account. This scheme offers an interest rate of 8.4% and is tax-free. One has to be careful that this scheme is only for the girl child. A Plan to save for her marriage or her education.

#1. PPF (Public Provident Fund)

Wednesday, April 11, 2018, 12:25 PM

This is the best scheme to invest for a number of reasons. It is a 15-year scheme where you can build a corpus for your child's education. The current interest rate of 7.9% by far beats interest rates of banks, which are at 7%. Apart from this you get a tax rebate of up to Rs 1.5-lakhs under Sec 80C of the Income Tax Act.

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Calculator

Home Calculators Child Goal Planner

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Child Goal Planner

Years to goal
9

Future Cost
9,19,230

Monthly investment required
5,204

Yearly investment required
65,608

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What is a child goal?

A child goal is part of a financial goal. A financial goal states in money terms what your current financial status is. It is an idea of where you stand financially. What are your financial assets and so on?

The next step is where you want to be financially in a specific time in the future.

Your financial goal can be a medium term goal such as providing a good education to your child. For this you might need to invest money over a medium term say 5-10 years for your child’s higher education called a child goal. For this you will need an online child goal calculator.

How do you plan for your child’s goals using a child goal planner?

Step 1: You need to plan for your child’s higher education as early in his life as possible. You enter the child’s present age by using the slider in the age of the child slot in the online child goal calculator. You can also fill in the age directly in the “age of child” slot of the online child goal calculator.

Step 2: You need to have an idea at what age your child might need this money for his/her marriage or higher education. You enter the child’s age at which the money is required by using the slider or directly in the “age of the child at which you require the money” slot of the online child goal calculator.

Step 3: The numbers of years to the financial goal of your child’s education or marriage is calculated directly by the online child goal calculator.

Step 4: You need to know what the present cost of the child’s education or marriage will be. You enter this cost in the “Present Cost” slot.

Step 5: You need to project what the average rate of inflation over the time period will be. Inflation is the general rise in prices of goods and services in the economy over a period of time. You enter the rate of inflation in the “inflation slot” provided.

Step 6: Using the present cost which you have filled and the projected inflation rate the online child goal calculator calculates the amount you would require for the future child goals in the “future costs” slot.

Step 7: You have to fill in the amount you have currently invested so far towards your child’s goals in the “amount invested so far” slot.

Step 8: You have to fill in your expected rate of return on investment in the “return on investment” slot.

Step 9: The online child goal calculator calculates the monthly amount you need to invest to get the required amount for your child’s goals.

Step 10: The online child goal calculator also gives the yearly amount you need to invest to get the required amount for your child’s goals.

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08 May 2018, Tuesday

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‘Beti Bachao, Beti Padhao’ is an excellent campaign with a cause. It was initiated by the Government of India, headed by PM Narendra Modi. In January 2015, a small savings scheme called ‘Sukanya Samriddhi Yojana’ (SSY) was launched. It aims to create awareness on th...

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