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Use these summer holidays to chart out your child's education plans

By Finserv MARKETS - Aug 28,2019
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Child Education Plans

Introduction:

Successful parenting is no easy feat. You want to provide your kid with the best resources and opportunities, but it gets harder with each passing year with a surge in the costs and unrelenting competition. Your child may dream of becoming a data scientist, or artist or a photographer.

It is imperative that you have a discussion with your child – about their aspirations, goals, ambitions -to give wings to your child’s dreams sooner than later. Getting the right education is the stepping stone to your child’s professional success. However, a good education is expensive and the costs will only continue to rise. The cost of studying in an engineering college comes as high as Rs 30 Lakh, an MBA will set you back by Rs 40-50 Lakh.

According to the Reserve Bank of India (RBI), spending on tuition and hostel fees by Indian students studying abroad has shot up 44% from $1.9 billion in 2013-14 to $2.8 billion in 2017-18. It is certainly not a decision or an investment that can be taken on a whim. What complicates this further is the ever-increasing competition.

Take this, for instance. Undergraduate numbers from India to US grew by an unprecedented 30%, to over 16,500 students in 2015. So, will you let money come in the way of their dreams? Especially when all it takes is a little planning from your end!

Child Education Plans

It’s never too early (or late) to plan

Having established that investing in and buying a child plan as early as possible is a prudent thing to do, it is worth noting that there’s no time too soon or too late for you to catch up on it.

You can purchase a plan for your child as young as 14 days old, with the policy tenure varying from 15–25 years. In fact, if you start planning for your child’s needs right from his/her birth, you will have nearly two decades to create a fund of the right size, grown through compounding effect, to allow his/her dreams to be a reality.

All you need to commit to are small, monthly contributions. So if you haven’t had this discussion yet, use these summer holidays to your advantage and spend time with your kids to understand their goals and aspirations!

What’s the plan?

Child plan is an investment cum insurance plan to help secure your child’s future financially. It is a Unit Linked Insurance Plan, or ULIP, whereby you can create a corpus to fund your child’s education while reaping dual benefits. On one hand, in the unfortunate event of your death, a sum assured is given to your child. And on the other end, it provides financial security, since the fund can be used to finance important milestones in your child’s education through the partial withdrawal facility.

Dual Benefits under one plan

As mentioned before, ULIPs provide you with the perfect blend of investment and savings in a single plan. It safeguards your child’s future even in the unfortunate circumstance of your demise. In the case of an eventuality, you can rest assured that your child’s future is taken care of and that they have a financial cushion to fall back on.

Prevents the vicious debt cycle

The staggering figures of student debt across the world are not unknown to any of us. It is hard to keep up with the education costs and then the repayment of loans. It is also impacting the lending sector on the whole: the total value of non-performing loans for the public sector banks in the education sector has grown from Rs.3,536 crore in March 2015 to Rs.5,192 crore in March 2017 spiking the NPA ratio to 7.67% in FY17 from 5.70% in FY151. But you can prevent the vicious cycle of exorbitant interest rates by opting for a child education ULIP.

Tax Benefits

A ULIP is the best investment option from the tax exemption perspective too – the Income Tax Act of 1961 has exempted the premium, the returns and the maturity on ULIP plans under section 80C, 80CCC and 80CCD.

Conclusion

As a parent, you have several apprehensions about your child’s future but you would do anything to help them make their dreams a reality. Bajaj Allianz Future Gain ULIP child plan helps you do just that – it provides a cloak of financial protection for those dreams, and makes sure they don’t have to compromise on your child’s quality education and professional pursuits. Your regular, small investments when compounded will grow into a handsome amount upon maturity.

Whether you are or aren’t around, this plan will sure your wish for your child to flourish professionally is fulfilled. In fact, with Bajaj Allianz ULIP plans available on Finserv MARKETS, there are other added benefits including free life cover, tax exemption and the choice of investment portfolios. If you are thinking of discussing career and ambitions and aspirations with your kid, the time is ripe for it!

To know more on ULIP investments in depth, you can check out these blogs:

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