What are Child Education Insurance Plans?

It is crucial to invest in plans that take care of your savings and interests to shape the financial future of the child better, be it in your presence or absence. One such plan that secures your child’s future is a child education insurance plan . The premiums can be paid monthly, bi-annually, annually or as a one-time payment. At the end of maturity, your child receives a lump-sum amount known as the maturity benefit that can be used to fund the education expenses.

Your children’s’ careers don’t deserve to bear the brunt of your financial setbacks, loss of occupation or even untimely demise. Therefore, it is necessary to have a working plan with contingencies included, beforehand. An insurance plan dedicated specifically to your child’s future is a much-needed protection layer.

• Maturity or Death Benefit: In an unfortunate event of the policyholder’s demise, the child gets a lump-sum benefit. In case the policyholder survives the policy period, the child gets a lump-sum on maturity.
• Waiver of Premium: The policy will continue to function as it is, and the insurer will pay the remaining premiums on the policyholder’s behalf in case of death before maturity.
• Tax Benefits: Section 80C of Income Tax Act allows them to avail tax deductions up to Rs. 1.5 lakh every year, from their taxable income.

Let us understand this with an example. Raj invests in a 20-year child insurance plan and pays a monthly premium for the same. He passes away in the 16thyear of the term. In this case, the beneficiary will receive the entire insurance amount. If Raj outlives the tenure, he will be allowed to allocate the amounts in parts for their children’s education or wait for the maturity benefit.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.