As a parent, nobody wants their child's future to get hindered by a lack of money. Also, savings alone will not be sufficient, parents need to be a little more active and ensure they continue with investments. One such avenue to save for your child’s future is investing in an insurance plan that is specifically geared towards protecting the dreams you have for your child’s future.

When calculating the amount needed for a child’s education, many parents fail to include the escalation in costs when their children take new steps towards the future. In fact, according to a 2019 survey [1]conducted by HSBC, 61% Indians wish they had started saving for their child’s education earlier while 46% wish they had saved more regularly. About 35% worry they don’t have financial resources to support their child’s education. This shows us the value of starting to save early for our children's education along with saving the right amount on a regular basis.

For example, let us assume your child is 13 and for now, you do not face any issues in paying his/her fees. However, when they go to college, the annual fees might go up by anything between 200% to 600% depending on the course they choose. There will also be several additional costs if your child goes to study in a different city, thereby adding living expenses. All these can make just savings look like a very meagre amount. The last thing you want is money to hinder your child’s progress, after all.

To ensure that you are not caught unawares, it is important to invest regularly, systematically and keeping an eye on the markets. This may sound complicated, but a great way to do this is by investing in child plans, which are mostly tailored with education in mind.

Child education plans provide a cover component and help you build a corpus which can be used either in a lump sum or in stages to suit your child’s needs. Your investments in child plans will continue no matter what happens to you. Child insurance plans come with a Waiver of Premium benefit which ensures that all the future premiums are waived. So no matter what happens, your child is entitled to a lump sum amount for his future.

Child education plans are also a good way to assess how you are doing in your planning for your children’s future education at various stages in life. For example, if your child begins to show an inclination to study a subject in future, you can increase your investments accordingly. But if you are doing well with the investments (consistently beating inflation rates with minimum risks) and you believe you can fund the gap with your monthly income it will be better to prioritize the safety of the corpus.

If you buy a plan very early into your child’s life, you have some time to take a little more risk by keeping a more equity-focused portfolio. As you reach closer to your goal, you can look more at preserving the investments and reach the end of the investment cycle via debt investments. Investing in equity might sound risky to some investors, but remember, you will not always beat inflation by taking a very conservative approach. Given that most child term plans come with a 10-20 year investing period it becomes easy to plan investments with an equal focus on investing right and investing brave. For information related to Life Insurance, Term Plan and Term Insurance visit us at PNB MetLife.

Sources:
¹ https://economictimes.indiatimes.com/wealth/personal-finance-news/61-regret-starting-late-in-saving-for-childs-education-hsbc-value-of-education-survey/articleshow/67911338.cms

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Disclaimer: 
The aforesaid article presents the view or an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision.

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