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5 reasons why you should use a child plan to secure your child’s future

Oct 30, 2019 | 9 months ago | Read Time: 3 minutes | By iKnowledge Team

Education is becoming more expensive with each passing day. Thus, parents tend to be on the lookout for investment vehicles that help them secure their child’s future. Financial institutions like Aegon Life,have tailored specific child plans and ULIP plans that enable you to provide for your child’s education and financial needs, when the time arises.

The average cost of educating your child from their birth till they reach college tends to benearly Rs 55 lakhs in an urban setting, not counting the cost of educating your child abroad. The compounding effects of inflation on higher education can make the figure of 55 lakhs seem unnervingly insufficient too! A recent survey revealed that 65% of parents invest two-thirds of their monthly income on education expenses of their children.

Thankfully, knowledge about school fee structures is usually available on public domains, including facilities that help you calculate the size of your child investment corpus that are available online.

Child plans like one byAegon Life provides a long term, risk-averse solution to meet the inflated future cost of education, without severely damaging the overall financial position you aim to achieve. Investing in child plans produces more benefits than the obvious one of securing your child’s future dreams.

Cushion against fund flow disruptions

When you are considering a child investment plan beforehand, you create a cushion of protection for yourself from an uncertain income flow in the future. In the event of your unfortunate demise, or in case of a drop in your income, your child’s education and by extension, their future is protected by such child plans. As with any insurance model, the earlier you invest, the better. Depending on your risk appetite, investing when you are sure of the stability of your income sources and insuring your funds when you are not, is a basic thumb-rule.

Inculcating a habit ofsavings

Investing in a child plan not only assures your child’s financial future but also inculcates in you a disciplined habit of saving. Saving is an art that requires discipline and commitment, the fruits of which, compound into a comfortable corpus. Committing to a child investment plan also motivates one to get into the habit of regular disciplined savings.

Focused on a single purpose

While there are various other investment vehicles to ensure the growth of your funds, none of them other than child plans are specifically motivated to a single purpose, and that is to secure the future of your child’s education needs. Based on your policy’s terms, premiums are discontinued in the event of an eventuality. These plans keep your funds from going astray by clearly specifying which education costs and general expenses of your child are to be covered. These customized plans serve their purpose by using your investment to secure your child’s future, as compared to free reign investments that are better utilized to achieve other financial goals like purchasing a vehicle or a house.

Easier planning for a well-diversified portfolio

We plan our futures on our financial and asset creation goals. Child investment plans are prudent financial instruments that ease the stress of planning for your child’s future, giving you the right head-space to plan your retirement corpus better. Family planning has taken a turn towards nuclear families, where couples decide parenting later in life.Child plans ensurethat the burden of rising education expensesis adjusted for inflation during the post-retirement period of their life.

Tax benefits of child plans

Child plans offer tax concessions and benefits on both – the invested funds and the benefits received, to reduce the financial stress that comes from investing in them. The added benefit of a child education plan is that you can reinvest the amount you save from tax.Child plans arealso exempt from tax on capital gains and maturity benefits under Section 10D(D).

The wisest thing to do is to start planning for your child’s financial needs and education future as early as possible, even if you intend to plan your child later in life. If you already have one (or two), then the younger they are, the more they benefit from your investment.To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.


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