A topic that often flies under the radar in common discussions about insurance is child education. Parents dream of a successful and prosperous future for their children, which is generally determined by having access to a high-quality education. However, as the costs of education in India rise, including tertiary education, the fees can be a significant burden on family finances by the time your child reaches that stage if you are not committed to saving early. According to Care Ratings¹, parents can spend Rs. 14,264 on general graduate courses and pay as much as Rs.72,000 per academic year to study medicine.

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.

1 https://www.careratings.com/uploads/newsfiles/Household%20Social%20Consumption%20on%20Education%20in%20India.pdf