Latest news

07.20.2020

Here’s how being denied for a credit card impacts your credit score

Being denied for a credit card doesn’t hurt your credit score. But the hard inquiry from submitting an application can cause your score to decrease.

Read more

What New Parents Should Know About Life Insurance

Having a baby can bring the gaps in your financial plan into sharp focus. New parents often feel they need to find ways to provide financial security...

Read more

Why Searching for Cheap Stocks Is the Wrong Investing Strategy

The premise makes more than enough sense: For the same reason consumers want more bang for their buck at the stores they regularly shop...

Read more

Private credit lenders seek protection in minimum liquidity protocol

Private credit firms are requiring their borrowers maintain a strong liquidity cushion as the coronavirus pandemic forces middle market companies...

Read more

Consumer credit fell at a slower 5.3% in May as the economy began to recover

The use of credit cards fell at a much slower pace in May as the economy began to recover and the government provided financial relief to households...

Read more

Latest news

07.20.2020

April 09, 2021

Should you go
for Child Plans
as education cost
shoots up?

With a child-plans investor gets a guaranteed payout for financing the child’s education and hobbies, hence, the child’s needs are taken care of even if the parents are not around.

By Priyadarshini Maji

An industry leader that

Trusted by 32,000+ Merchants Processes Over +4 Billion Dollars Annually 24/7 Always Available Customer support 7+ Year Lock on Processing Rates No Early Termination Fee Free Terminal Program is A+ Rated with the BBB Over +460 Software Integrations Guaranteed Savings or We Pay You $1000

According to a recent survey by the National Sample Survey Office, between 2008 and 2014, the average annual private expenditure for general education (primary to post-graduation and above) has shot up by a staggering 175 per cent. During this same period, the annual cost of professional and technical education has increased by 96 per cent. These expenses include course fees, books, transportation, private coaching and other related costs. Hence, experts believe it would be fair to assume these costs have increased further since 2014.

Anup Seth, Chief Retail Officer, Edelweiss Tokio Life Insurance says, “Rough estimates suggest education inflation in India is about 10 – 12 per cent on an annual basis. Even if we are to consider a conservative estimate of about 6-8 per cent inflation, it would create a significant financial impact. For instance, an engineering degree that currently costs around Rs 6 lakhs and MBA Rs 10 lakhs is likely to cost more than Rs 15 lakhs and Rs 30 lakhs after another 15 years.”

He further adds, “This is in India alone. For Gen Z and Gen Alpha, studying abroad has become a critical life goal. Many are vying for ivy leagues or other universities abroad to support their career goals.” Hence, proper planning is the need of the hour.

To start with child plans are one way to go about. There are various insurance companies that offer child plans – not all of these plans are traditional plans that invest only in debt funds, there are market-linked policies that allows investors to invest in both debt and equities.

However, experts say, one should consider the different range of events for the child such as their schooling, higher studies, hobbies, sports, etc. and make provisions for them, before opting for a child plan.

With a child-plans investor gets a guaranteed payout for financing the child’s education and hobbies, hence, the child’s needs are taken care of even if the parents are not around. Industry experts say child plans are known to usually offer better returns when compared to traditional investment avenues such as PPF or FDs.

Among other benefits of a child plan, having such a plan ensures that the child is financially protected, in case of an unforeseen event. The goals of a remain, in that case, remains unaffected. For instance, in case of death or disability of the policyholders, child plans make periodic payments and provide for the child’s goals. Most of these plans also come with the in-built waiver of premium, wherein the future premium for the policy is waived off if anything happens to the policyholder.

These policies are also quite flexible, as they offer multiple risk covers and payout options along with different payment terms. For instance, the policyholder can choose the regular premium, under which premium can be paid on a regular basis, be it annually, semi-annually, or quarterly. Policyholders also the option to choose the single premium option, under which they will be able to make the premium payment only once.

These plans also offer tax benefits – the premium paid is eligible for tax deduction U/S 80C of the Income Tax Act, 1961, and on death or maturity claim profits also is eligible for tax benefit U/S 10 (10D).

According to a recent survey by National Sample Survey Office, it states that between 2008 and 2014, the average annual private expenditure for general education (primary to post-graduation and above) has shot up by a staggering 175 per cent. During this same period, the annual cost of professional and technical education increased by 96 per cent. These expenses include course fees, books, transportation, private coaching and other related costs. Hence, experts believe it would be fair to assume these costs have increased further since 2014.

Anup Seth, Chief Retail Officer, Edelweiss Tokio Life Insurance says, “Rough estimates suggest education inflation in India is about 10 – 12 per cent on an annual basis. Even if we are to consider a conservative estimate of about 6-8 per cent inflation, it would create a significant financial impact. For instance, an engineering degree that currently costs around Rs 6 lakhs and MBA Rs 10 lakhs is likely to cost more than Rs 15 lakhs and Rs 30 lakhs after another 15 years.”

He further adds, “This is in India alone. For Gen Z and Gen Alpha, studying abroad has become a critical life goal. Many are vying for ivy leagues or other universities abroad to support their career goals.” Hence, proper planning is the need of the hour.

To start with child plans are one way to go about. There are various insurance companies that offer child plans – not all of these plans are traditional plans that invest only in debt funds, there are market-linked policies that allows investors to invest in both debt and equities.

However, experts say, one should consider the different range of events for the child such as their schooling, higher studies, hobbies, sports, etc. and make provisions for them, before opting for a child plan.

With a child-plans investor gets a guaranteed payout for financing the child’s education and hobbies, hence, the child’s needs are taken care of even if the parents are not around. Industry experts say child plans are known to usually offer better returns when compared to traditional investment avenues such as PPF or FDs.

Among other benefits of a child plan, having such a plan ensures that the child is financially protected, in case of an unforeseen event. The goals of a remain, in that case, remains unaffected. For instance, in case of death or disability of the policyholders, child plans make periodic payments and provide for the child’s goals. Most of these plans also come with the in-built waiver of premium, wherein the future premium for the policy is waived off if anything happens to the policyholder.

These policies are also quite flexible, as they offer multiple risk covers and payout options along with different payment terms. For instance, the policyholder can choose the regular premium, under which premium can be paid on a regular basis, be it annually, semi-annually, or quarterly. Policyholders also the option to choose the single premium option, under which they will be able to make the premium payment only once.

These plans also offer tax benefits – the premium paid is eligible for tax deduction U/S 80C of the Income Tax Act, 1961, and on death or maturity claim profits also is eligible for tax benefit U/S 10 (10D).

This article was originally published by Priyadarshini Maji, financialexpress.com.

VantageScore 3.0: What's a Great
Credit Score?

Why an Excellent
Credit Score
Matters

MONEY • BEST • CREDIT CARDS • SCORE

We updated our privacy policy as of June 03, 2020. Learn about our personal information collection practices here.

Help
-