With the cost of education on a rise, parents are looking at various investment vehicles to secure their child’s futures. Many financial institutions have come forward with plans that enable parents to provide for the education and other needs of the children when the time arises.
Estimation of the amount that you would need is also a little easier to arrive at in case of education plans because school fee structure is usually public domain knowledge.
On average, bringing up a child from their birth till college costs a neat Rs 55 lakhs in an urban setting. With inflation and higher studies after college, one can infer that the figure of 55 lakhs seems to be quite low! An Assocham survey revealed that 65% of parents spend more than half of their monthly income on the education expenses of their wards.
Child education plans like ICICI Pru Smart Kid provide a long-term solution for meeting the cost of education without creating a dent in the financial position of the parents. There are more benefits to investing in a Child education plan than what meets the eye.
Secure with Present Inflows
The best thing about planning and investing in an education plan beforehand is that you protect yourself from the future fluidity of income flow. In case of loss of income or untimely demise of the parent, the child’s education and therefore his future is protected by such plans.
As it is said to make hay while the sun shines, it is sensible to make investments when you are sure of the stability of your cash inflows. It helps in making a saving without affecting your lifestyle adversely.
Investing in a child’s plan is a great way of saving every month and keeping an amount aside for your child’s future. When a committed investment needs a certain amount to be invested every month then you will be bound to save it. It is also a great way to inculcate a behavioral pattern that includes regular disciplined savings.
Plans Built for Specific Purpose
There are various investment avenues and options where you can invest for returns. However, child education plans are specifically created with a purpose in mind- your child’s future. These plans allow discontinuation of premium when the eventuality as mentioned in the terms of policy happens.
Some of them carry a bonus element which can prove to be very helpful when there is a need to invoke the plan benefits. These plans clearly specify and tend to service education costs and other specified general expenses of the child in the future. These custom-built plans serve their purpose better than other investments you might make for securing your childâ’s future.
Facilitate Your Future Plans
We all have plans for our future that revolve around long-term wealth and asset creation. With your child’s education taken care of by a prudent financial instrument, you can plan better for your retirement and wealth accumulation.
These days as parents are choosing to have children a little later in life; a child plan assures that the burden of heavy education expenses would not fall on them during the post-retirement period of their life. What’s more, detailed planning on your child’s education plan would also help you create your own wealth goal blueprint in a more effective manner.
Child education plans offer tax benefits on the amount invested and benefits received. So, while you are saving for your child’s education, you also get an opportunity to reinvest the amount saved from the taxes.
For example, ICICI Pru Smart Kid Plan gives you tax benefits on premiums paid and benefits received. The investment up to Rs. 1,50,000 are allowed as a deduction from the taxable income each year under Section 80C. Similarly, all capital gains and maturity benefits on this child plan are also exempt under Section 10D(D).
Judicious planning for your children’s future is essential and empowering them with Education plans is a wise thing to do. Start early to reap maximum benefits and create a sustainable future for them to bloom in.
Image source: BigStock