A few decades ago, if a teenager went up to their parent and said that they wished to apply to an Ivy League school or an IIT, the parents would experience pure joy. However, today that joy would probably be mixed with apprehension and financial worry- will I be able to afford my child’s higher education? Do I need to sell my assets to afford their tuition? Do I need to explore education loans?
Many worries, many questions.
Gratefully, there are an equal number of child education plans available today which parents can choose from and start investing in even before the child is born. These plans are basically an insurance policy that secures your child’s future. How so? In case the parent(s) is no more and the child’s education needs to be financed, the pay-out from the insurance policy ensures that the child has money to pursue their academic dreams.
Let’s look at two specific reasons for which you, a parent, may want to invest in a child education plan:
1. Paying for private education
Long gone are the days when private education was open only to the social and political elite. Yes, it still costs a lot of money, but the access to private schools offering a holistic education is now bigger for the non-elite too. Be it a school that teaches coding to its 10-year-olds or a school offering equine therapy, more and more parents want to enrol their child to these private schools for the exposure it promises…and thankfully, it doesn’t have to cost a limb anymore. However, what it does need is financial discipline and a good child education plan which covers the cost of this private schooling.
2. Paying for higher education abroad
Similar to private education, access to an education abroad has become better for the masses. There is more awareness of the learning and career opportunities that education abroad can provide to the child. Although a child typically pursues an education abroad when they are 15 or older, it is important for the parents to start investing for it way earlier. Child educations plans help here. Parents can start investing in a plan as early as the child’s birth!
Now that you know the main reasons why a parent will want to invest in a child’s plan, let’s explore the investments schemes for the same:
3. Unit Linked Insurance Plan (ULIP)
A ULIP is a mix of insurance and investment. Part of the premium goes into paying to keep the insurance valid, while the rest goes into equity or debt investments.
4. Term insurance
As dark as it may sound, we cannot be certain that a parent will always be around for their kid. The untimely demise of the parent(s) can lead to a complete financial upheaval for the child. Hence, a life insurance policy or term policy that guarantees a pay-out to the child in case of their parent’s death, can be helpful in ensuring that the child has financial resources to pursue an expensive education if they wish to.
Apart from this, you also may be aware of having a savings account in your child’s name where you keep adding money to secure their future.
That’s it, parents! You can now start exploring various ideas to protect your child’s academic future!