Most of us plan for our retirement and life insurance. But planning for the child’s higher education is as important as the other two. An MBA in today’s world would cost somewhere around 5-7 lakhs. Keeping in mind the inflation, the same MBA would cost about 4-5 times in the next 15-20 years. To sustain this raising cost, planning for your child’s education is the need of the hour.
You have a number of options that you could choose from. If you want to club your insurance and investment, there are number of child plans in the market. Or you could opt for term insurances and separately plan for your child’s future and education. Or you can opt for a term insurance and equity diversified mutual fund. The choice is yours! Here are some pros and cons of choosing a child plan and/or term insurance.
|Child’s plan||Term insurance|
|In case of eventuality||Total sum assured is paid. Maturity amount is also paid at the end of the policy term||Total sum assured is paid to the beneficiary.|
|Maturity Benefits||Full maturity amount is paid||No survival/maturity benefits.|
|Premium to be paid||Higher than the term insurance for the same sum assured.||Lower premium in comparison to the child’s plan|
|Premium payment||Monthly, quarterly, yearly||Monthly, quarterly, yearly|
|Partial withdrawal||Available which could be used for child’s education||No|
|Life insurance||Grossly under insured||Sufficient insurance cover|
However I personally feel that clubbing your insurance and investment in one policy is a bad idea. Instead, go for a term insurance and plan for your child’s future by taking some equity diversified mutual fund. Check out this article http://articles.economictimes.indiatimes.com/2013-10-18/news/43178477_1_equity-mutual-funds-top-100-stocks-high-conviction-stocks