Every parent or guardian sets aside money for their child to use for education and emergencies. All these savings are apart from their expenses for improved lifestyle and sustenance. And most parents give preference to a child education plan to focus more on educational support. Well, you don’t need any more reason to buy an insurance policy other than to invest in your child’s future. But don’t worry, because here you will find several other features of a child plan which are beneficial.
The 6 Best Features of a Child Insurance Plan
Child insurance plans or child education plans are specially designed to give extra discounts, returns, and interest rates solely for minors. Usually, one invests in a child plan when their child is still young to maximize the returns when they reach the age for higher education. Several people opt for a child plan even if they are financially stable. If something does not go according to the plan, they will have to take the resort to borrow or loan money. And any debt can ruin the child’s future as it disturbs their mental and financial stability. Given below is a brief description of other beneficial features of a child education plan.
One of the most helpful features of a child education plan is a guarantee on the maturity amount. It results from investing in a reliable and trustworthy investment mode, i.e., insurance. You will assuredly get the maturity benefit at term end, sometimes with extra interest rates.
High Maturity Amount to Invested Amount Ratio
In the case of a child education plan with interest rates, when you compare the investment to the returns, there is a stark increase in the value of the returns. Thus, child plans have a higher return to investment ratio among most insurance investment plans.
Special Discounts to Promote Child Financial Safety
As these plans are for minors, there are several discounts and benefits. These include lower premiums, higher interest rates, more tax savings, no-claim discounts, timely payment bonuses, and regular payouts at important life stages of the child. These discounts help reduce your premium burden, thus allowing you to pay a moderated premium in comparison to plans for adults. And thus, providing safety to your child and simultaneously providing you monetary benefits.
Several Tax Relaxations
As you know, child plans and senior citizen plans are two plans which have the highest interest rates. But these plans also have the highest tax relaxations compared to any other insurance policy. As per the Income Tax Act of 1961, a taxpayer can claim a maximum of INR 1,50,000 deductions in the taxable income each year for payments made towards child plan premiums.
If you have a maturity amount without interests, then the returns have tax exemptions as they come under the category of repayment of funds. And if you have a plan that has interest payment, they only have a small tax rate. But, in case of maturity due to a sad demise, then the entire returns of the plan, including the repayment of capital and capital gains, have full tax exemption. This full tax exemption is under section 10D(D) of the same Income Tax Act. However, tax laws are subject to change from time to time.
Long Term Investment
The main purpose of a child education plan is to provide for the educational expenses in the future. This automatically makes these plans a type of long-term plan investment. And you know that with the increase in the number of years of investment, the returns also increase.
Investment Possibility Even with Lesser Premium Amounts
The best benefit of a child education plan is that you can invest in your dear child’s future with as low as INR 500. If you don’t have provisions to accumulate a large sum of money at a time, you can opt for monthly premiums. And if you don’t have enough funds for any investment, you can register your child under government child plans. These plans have special benefits for children, especially for a girl child. All these methods help people with limited funds to have a chance to provide a better future for their children.
Knowing these features will widen your knowledge of the benefits of a child education plan. If you don’t have one for your child yet, you must look for suitable plans. You can find several such good features in the child plans of leading Indian insurance company.