A child education plan is crucial for the kid’s future education. However, there are various child plans, and it can be difficult for parents to select the right policy.

In this article, we will discuss a few things to consider while selecting the right education plan.

Every parent plans to build sufficient funds to ensure their child receives the education he/she wants. One of the investment options that people consider are child education plans. Primarily, parents can invest in a unit-linked insurance plan (ULIP) and an endowment plan.

In case of a ULIP, a part of the premium goes towards life cover, and the other part is invested in investment instruments like equity and debt funds. However, if a person opts for an endowment plan, then the investment is made towards debt instruments.

Let’s take a look at some benefits of child education plans-

  • To Pay for Education Expenses

As education expenses are rising every year, it is essential for parents to look for plans that can allow them to build funds for their child’s education. A child education insurance can enable parents to accumulate sufficient funds to meet their child’s education costs.

  • Maturity Benefit

If parents start investing in a child plan, then they can receive maturity benefit. This maturity benefit can be very beneficial as it can make it easy for parents to meet the high education costs.

  • Income Tax Benefits

The premium paid towards a child plan can be claimed for a tax deduction up to Rs. 1.5 Lakh under Section 80C. Furthermore, the payout from a child education plan is tax-free under Section 10(10D).

How to Select the Right Child Education Plan

There are many child education plans. Thus, it can be difficult for parents to choose best child education plan.

Here are some of the factors that you should keep in mind when selecting a child education plan-

  • Opt for a Plan that Offers Waiver of Premium

Waiver of premium is a very important benefit. This benefit can ensure the policy stays active in case the parent passes away untimely. If the parent dies, then the insurer will waive off the remaining premium, and the policy stays active until it matures. Furthermore, the child can get the death benefit as well as maturity benefit.

  • People With Low-Risk Appetite can Go for Endowment Plans

If a person has a low-risk appetite, then endowment plans are right for him/her. Furthermore, in case the investment tenure of a person is less than 10 years, then he/she should opt for an endowment plan as it can ensure the invested amount stays safe.

  • People With High-Risk Appetite can Go for Equity-Linked Policies

If a person invests in a ULIP, then he/she can earn significant returns. As unit-linked insurance plans invest in equities, an investor can earn higher returns. While ULIPs are a risky investment option, they can provide great returns to investors if they invest for a longer tenure.

Keep the aforementioned points in mind when selecting a child education plan.