Educating your child is a Must?
There are a number of options you can consider when you are deciding where to invest for your child's education. Good education will guarantee your child a better life. You, too, will have the satisfaction that you played a part in helping them to get the best education.
Here are 5 reasons to plan for your child's education.
Rising Education Costs: India is experiencing rapid education cost inflation every year. The cost of quality private education is higher than ever. Parents who want to ensure quality education for their children have to shell out more than ever before. In many cases, education costs put a heavy burden on the family's finances.
Planning for your child's education expenses from the beginning will help make sure such financial concerns do not crop up when the child is in need of money for education.
With the help of a child education planner, you will be able to create a fund for your child's future education. The best child plan will help to manage the cost of education to ensure your child can reach their full potential, regardless of cost.
Securing the child's future: With the help of a child plan, it is possible to secure a child's future even when their parents aren't around. When the child has a child plan supporting their educational pursuits, the child will not be concerned about any financial implications in their educational path. The child will be able to pursue their dreams without having to worry about future expenses.
Tax Benefits: Premiums paid on a child's education plan will allow the policy owner to receive tax benefits under section 80C and 10 (10D) of the Income Tax Act. While these provisions may change from time to time, you may be able to claim some tax benefits for premiums paid.
Save your child from the burden of education loans: Education loans received from banks generally carry very high interest rates. This will cause the child to remain in debt for a very long time. Don't forget that a loan can also dampen an individual's spirits because borrowing is a significant obstacle for the young professional entering the workforce.
Starting a life after college with a massive financial burden is difficult and a very bad start for the young person. With the help of the Child Education Planner, you will get an estimate of how much money you will need to invest per month to meet your child's future education costs.
Convenient access to funds when the child needs it: A child education plan will prepare the child with the ability to dream without limits when it comes to education. Most of the plans will offer payouts when the child needs the funds. This would allow the child to carefully evaluate their opportunities and help them achieve their dreams. The plan also provides them with the ability to make their own career plans. All of which can be done with the help of a Child education planner that will ensure a lack of financial resources is not a hindrance.
Disciplined investment for long-term wealth creation: A child plan encourages the family to invest consistently through regular premiums, and with the help of a Child education planner, the family will get to know how much money they will be able to save by a particular period. It is the nature of regular investing that lends itself to accumulating a significant amount over the long term. If you start early, you can receive the full benefits of compounding to grow your investment to pay for your child's education.
Take, for example, if you were to invest ₹10,000 every month when your child is 6, until they reach 18 years, it will grow up to ₹40.36 lakh, assuming the expected return is 15%. If you started later, by investing ₹20,000 every month from age 12 to 18, the fund value will be limited to just ₹23.42 lakh. By starting six years earlier and investing half the monthly investment, you would have accumulated almost 72% more by being a regular investor.
The same calculation for your child's education fund can also be done with the help of a Child education planner.
Tax Advantages of a Child Education Plan
A Child Investment Plan premium qualifies for a tax deduction of up to Rs. 1,50,000 in a financial year, subject to the conditions specified in Section 80C of the Income Tax Act, 1961.
For example, a Child Plan gets the tax-free maturity benefit as long as the annual premium amount does not exceed:
- Rs. 2,50,000 for Unit Linked Insurance Plans (ULIPs); or
- Rs. 5,00,000 for other than Unit Linked Insurance Plans (non-ULIPs).
These tax benefits will apply during the entire policy period and remain tax exempt upon completion of the policy or on the death of the parent (subject to conditions of the relevant conditions).
Tax Benefits for Child Education Plan
Section 80 C: Premiums paid under this Plan will be eligible for tax deduction under section 80C up to Rs 1,50,000, subject to certain conditions specified.
Section 10 (10 D): You will be able to enjoy tax-free maturity with your child plan with an annual premium of up to Rs. 2,50,000 for ULIPs or Rs 5,00,000 for other than ULIPs, subject to certain conditions mentioned.
Additionally, tax-free benefits are received on death.
At last,
An essential investment a parent can make is in their children's education. A college graduate is more likely to contribute positively to society as well as earn more money in their lifetime than a child who did not graduate from college. The investment you make in your daughter's or son's education will have a great impact on their lives and your lives.
Therefore, it is never too early to consider planning for your child's education. If parents think ahead and use a child education planner well with a reputable financial planner, they can maximize the value of their savings.
