Best Child Plan for Education and Marriage

Every parent aims to secure their child’s future. Whether arranging funds for higher education or creating a sizable fund for hosting a grand wedding festivity for your child, the goal can differ for different parents. However, the process to achieve these financial goals remains relatively similar for most – investing in a Child Investment Plan. These financial products feature the dual benefits of investment and saving, providing two-pronged financial security. In this article, we explain how investment in Child Plans helps parents accumulate wealth for their children’s education and marriage needs through systematic savings.  

How Can Child Plans Help With Education?

Parents should consider investing in a Child Plan because it will support their child’s future educational needs in the following ways:

• Wealth Creation for Future Education

When you begin investing in the best child plan for education such as Shriram Life Assured Income Plan, you follow a disciplined, long-term saving approach to build a large fund for your child’s higher educational requirements. It ensures you regular set aside a fixed amount that can later be used for your child’s higher educational expenses.

• Death Benefit

Since the ideal plans have an insurance component, they ensure your child’s education doesn’t stop in the unfortunate event of the policyholder’s (parent) death. If you want to secure your child’s future, invest in plans with a built-in premium waiver feature.

• Flexible Payout Structures

When you’re planning your child’s future, estimate timelines and approximate amounts you will need to support your child’s higher education. It will help you identify a plan whose payout aligns with your estimated education timeline. For example, you can purchase the Shriram Life New Shri Vidya plan, which provides money-back benefits in the last four years of the policy. This flexible payout can be used to pay school fees, tuition fees, or other education expenses during that period.

• Securing Collateral-free Loan

If your child’s education plan changes over time and you need immediate funds to support those changes, you can use the existing best Child Plan For Education as collateral to secure a loan. You can typically get loans up to 80% of the policy’s surrender value, but this limit can differ from one insurer to another.

• Enhanced Maturity Amount

Some plans provide reversionary bonuses that get added to the maturity amount, increasing the educational fund. In case of a policyholder’s (parent) death, some nominees may also receive a terminal bonus, which enhances the maturity proceeds. We recommend exploring practical tips to select the best Child Education Plan for optimal returns.

• Benefits of Investing in Child Plans

Parents who want to secure their child’s future by systematically investing to aid their education & marriage funding must choose the right child plan. It has the following benefits:

• Financial Safety Net

Child plans are becoming popular because they provide two-pronged financial security. They help parents stick to systematic, routine savings to build a large enough fund to support their child’s major life goals, including education and marriage, without disrupting their retirement savings.

• Insurance and Investment Combination

Market provides numerous child plans with unique investment and insurance benefits for optimal returns. The right plan will help you accumulate and grow your investment while providing insurance and savings benefits to your child.

• Tax Benefits

Parents should consider investing in a Child Plan because it provides short-term and long-term tax benefits while securing their child’s future. For instance, the premiums paid toward child plans can be deducted u/s 80 C in ITR, up to a maximum of ₹1.50 lakh.

Maturity proceeds are typically tax-free u/s 10 (10D) if the premium payment does not exceed 10% of the policy’s sum assured value or ₹2.50 lakh in any year during the policy tenure. Starting April 2023, this limit has been set to ₹5 lakh for non-linked plans. Death benefits are fully tax-exempt.

• Money Growth

Policyholders investing early can enjoy the power of compounding, resulting in higher returns on maturity. If investing in ULIPs, you can pick the right financial securities for potentially higher returns.

• Additional Coverage through Riders

The top plans designed to support education & marriage funding provide numerous riders to strengthen the policy coverage and benefits. For example, besides standard coverage, you can also invest in Critical Illness Coverage, Accidental Death Benefit Cover, etc. Not all insurers provide the same riders for similar types of Child Plans, so always check the plan page on the website for accurate information.

How Can Child Plans Help With a Child’s Marriage Goals?

Investing in the best Child Plan for marriage such as Shriram Life Early Cash Plan can help you fulfil your financial obligations during your child’s marriage in the following ways:

• Long-Term Wealth Creation

Child Plans typically have a long policy tenure of 15-20 years, which is ideal for building a substantial fund for the child’s marriage. The power of compounding over this extended period amplifies the wealth creation process, so you don’t fall short of the expected marriage expenses.   

• Protection Against Market Volatility

Many Child Plans are market-linked, so that policyholders can invest a portion of their premiums in select financial securities, such as debt instruments, equity, or a mix of both, for potentially higher returns. Equity-linked returns are risky but they can grow at a rate much higher than the inflation rate, resulting in larger returns to support marriage expenses.  

• Flexible Maturity Options

The best Child Plan for marriage always provides flexible maturity options, so the policy matures during the expected marriage timeframe. For convenience, policyholders can extend the policy tenure by a few years if their child doesn’t plan to marry during that period. 

• Flexible Liquidity

Not all Child Investment Plans follow rigid payout, like lumpsum payment on policy maturity. Some plans also feature systematic withdrawal options so you can manage unexpected medical expenses or major property renovation without undue financial strain. 

How to Choose the Best Child Plan?

Your child’s future planning will remain incomplete if you don’t pick the right plan aligned with your specific financial goals. If you’re overwhelmed with the range of plans available, use the following tips to choose the right child plan to support education & marriage funding.

• Start with a Clear Goal Assessment

Every parent must calculate the estimated cost of education and marriage expenses, considering the growing inflation. Once done, look for plans with a sum assured and investment component that aligns with these calculated expenses.

• Understand Policy Features

Not every plan is designed the same, so parents must check and understand the plan-specific features to make an informed decision. The policy’s tenure, maturity benefits, lock-in period, inclusions & exclusions, and riders must also be evaluated. Always shortlist at least two to three similar plans and compare them critically to make the right choice. The same rule must be followed by choosing Protection Plans and other Savings Plans.

• Check Premium Waiver and Other Benefits

The best Child Plan for education and marriage will provide a premium waiver as an in-built or additional feature so the child (nominee) can receive full policy benefits in the event of the policyholder’s (parent) death. Look for similar benefits to secure your child’s future fully, even when things don’t go as planned.

• Compare Fund Growth and Returns

If you have a moderate to high-risk appetite and want to benefit from the market’s potential for greater returns, ULIPs will be a better choice. You can compare the shortlisted plans by analyzing their growth potential. Risk-averse parents must stick to traditional, non-linked plans for assured and risk-free returns.

• Consider Tax Implications

Verify the plan’s tax implications to strategize investment and withdrawals for optimal tax savings. Check the latest guidelines u/s 80 C and 10 (10D) for proper planning. We recommend consulting with a professional finance planner for personalized guidance.  

Build a Substantial Education and Marriage Fund with Shriram Life Insurance 

Whether you have a high-income job or multiple earning family members, it shouldn’t be used as an excuse not to invest in a child plan. Life is uncertain and the market conditions are unpredictable. Hence, investing in the best Child Plan for marriage and education will ensure your child’s future is secure, even when unfortunate or unexpected events occur. It will not only secure the child’s future, but also give you peace of mind and a sense of control, resulting in improved life quality. 

You can explore the various child plans at Shriram Life Insurance, like Shriram Life Assured Income Plan and Shriram Life Early Cash Plan because they provide several benefits: assured income, additional protection through riders, potentially higher returns, flexible payment terms, and more. If you’re exclusively looking for plans to support your child’s education, then our Shriram Life New Shri Vidya Plan will be a better choice.