How to finance your child’s education


Your parents had high aspirations and dreams for your future. You will continue on the same path for your children. It is a never ending cycle where parents want only the best for their kids. Good education serves as the ground rule for such expectations. However, with the ever increasing costs of education, if you do not plan well in ahead it will be a bit of a stretch to support your children’s education. There are lots of examples and instances where the cost of education has gone up by 3 to 4 times within just a decade. You simply cannot sit back and hope for a miracle, rather plan meticulously about the future of your kid. The first step is to acknowledge the fact that you need to financially plan the education of your loved ones. If it were only for a tuition fee it would still have been fine, but the costs don’t get over there, do they?

Planning for the education of your kids is not a ‘one size fits all concept’ as requirements differ from person to person. For parents whose kids are 3-4 years old, the planning will be very different from parents whose kids are 14-15 years old. It is important not to be overwhelmed by this and rather take the help of tools available to get on the top of the situation. The following are some ways to overcome those.

However life insurance child plans help you meet this goal.

What is a child insurance plan and how does it work?

Like we mentioned above, a child plan is a life insurance policy for the parent/s where the child is a nominee. The whole plan is designed to benefit the minor child. If something happens to the parent/s, who is the policyholder, the premium of the child plan is waived off (‘Waiver of Premium’ benefit), but the coverage continues. Payouts happen at regular intervals (depending upon the plan feature) and financially assist the child in every major milestone in life.

Investing in a child plan is to secure the future of your child

Investing in a child plan helps you in preparing to finance your child’s education and well-being of your child. Some of the ways in which this preparation can work are:

Cost of higher education: The cost of education is constantly climbing. If you have young children, you can only imagine how expensive a university course will be in about 15 or 20 years’ time. Let us understand that with the following chart –

Cost of higher education Future Value @8% inflation Future Value @8% inflation Future Value @8% inflation
at present value (after 10 years) (after 15 years) (after 20 years)
Rs 15 Lakhs Rs 32 Lakhs Rs 48 Lakhs Rs 70 Lakhs
Rs 25 Lakhs Rs 54 Lakhs Rs 79 Lakhs Rs 117 Lakhs
Rs 50 Lakhs Rs 107 Lakhs Rs 159 Lakhs Rs 233 Lakhs

Invest in a good child plan so that your child can get the best education now and also later on in life.

Protection in your absence: This is perhaps the greatest benefit of planning ahead and investing in a child plan. Life is unpredictable and if you die, your children will not have to compromise on their education or well-being. The child plan continues even after the demise of the parent/s and the premium is waived off. The child receives a death benefit equivalent to the sum assured on demise of the parents/s and again receives the sum assured and the other benefits on completion of the policy term. Therefore, the child plan takes care of your child’s education even if you are not around.

Almost all the insurers provide their customers with a child plan for education. You can visit their websites and use the calculator feature to figure out how much you need to save for your kid’s education. There are lots of options to choose from when it comes to a child plan.

As we can see, child plans are regular life insurance plans with an added benefit called the ‘Waiver of Premium’ which makes it unique. This unique benefit states that if the parent, whose life is insured under the plan, faces premature death within the policy period, the death benefit would be paid to the nominee (in this case the child). However, where other life insurance policies get terminated after payment of the death benefit, a child plan continues to run for the chosen tenure without paying the future premiums.

Additionally, when the plan matures, the specified maturity benefits (as stated in the policy document) are once again paid to the nominee despite the death benefit already paid. Thus, the child life insurance plan ensures that the parent’s grand vision for their child’s education remains intact even if the parent is not around to fulfill his or her duties.

Aren’t child plans smart enough when it comes to securing the finance for your child’s education?