These soaring costs push many parents to secure loans to pay education fees, which results in significant debt. Additionally, if one or both parents are unable to work due to a disability or death in their prime earning years, it can severely impact a child’s education prospects. To prepare for these realities, parents can take proactive steps early to obtain a child education plan from an insurer to protect their education journey from unexpected roadblocks. Although preparing for your child’s future can be overwhelming and you may feel the pressure to choose the best savings option, especially because of what is at stake, you can take small steps to achieve your goals. The child education plans offered by insurers can be categorized into two types: endowment-based and unit-linked policies. These types of insurance plans have key differences worth pointing out.
Endowment-Based and Unit-Linked Child Education Plan Options
Endowment plans are a form of life insurance that provide a payout in the event of the policyholder’s death before the plan reaches maturity or issues the sum assured at the maturity date. The regularly occurring premium payments allow policyholders to save over time for specific goals, such as education. This traditional form of insurance coverage is a long-term savings plan designed to offer parents a lump sum at the end of a policy period, plus bonuses that accrue from the first year. Policy terms can range between 10 and 25 years with a minimum sum assured of Rs. 2,20,000. Child investment plans, such as the PNB MetLife Endowment Savings Plan Plus plan (UIN: 117N099V02)] also offer an additional benefit to help you secure your child’s future by waiving insurance premium payments for the duration of the policy if you become ill with a critical illness, such as cancer, Alzheimer’s, coma, permanent paralysis of limbs, and blindness.
How Do You Choose the Best Option?
Choosing the right insurance to cover the future costs of your child’s education comes down to the number of children you have, their ages, risk tolerance, and liquidity needs in the long and short terms. For example, if your child is approaching their teen years, a policy with a shorter term or withdrawal options is preferable. If you are seeking a guaranteed payout amount, endowment plans deliver on these needs, while a ULIP can help you accumulate wealth.
Budget concerns also play a role in the choice of insurance. ULIPs tend to have higher premiums, due to the fact that it combines insurance and investment components. If you are strictly focused on having enough money for your child’s education, and other milestones in their life, savings insurance plans like the PNB MetLife Guaranteed Savings Plan, the PNB MetLife Super Saver Plan, or the PNB MetLife Century Plan can help you achieve that goal. Policies that guarantee the sum assured at maturity as well as a death benefit during the policy term deliver peace of mind about your family’s future. Additionally, optional riders for family, which require no premium payments after the policyholder’s death, or health care for serious illnesses, can ensure that your savings plans do not go off track. Insurance policies that serve as a child education plan can also deliver tax benefits, as per the Income Tax Act, 1961.
Securing your child’s future through quality education is priceless. In view of all of life’s uncertainties, it is a relief to know that you can take control of one area by providing a safety net for their educational aspirations. Talk to an insurance professional or advisor today to identify the best child education insurance option for your family. Visit PNB MetLife website to know more about term plan, term insurance & life insurance.
The aforesaid article presents the view of 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 or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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