#Child Plans |

Yes! Your Child Can Study Abroad. Here's How...

Your grandfather was the first graduate in your family. Your father earned his Master’s degree from his city’s top college. You went a step ahead and got your doctorate from India’s top university. Your dreams of making it to a top foreign university couldn’t materialise as your family didn’t have enough funds.

Now, when you look at your infant daughter asleep in your arms, you dream for her higher education in a top university abroad. But that could mean annual expenses in excess of $67,000* (Rs 44.89 lakh** ). While other higher education institutions abroad may not be as expensive, there is no denying that foreign education is typically more expensive than in India.

Despite higher costs, parents are increasingly considering foreign education for their children. One estimate indicates that there are as many as 553,000^# Indians studying abroad, a number that has gone up sharply over the years as Indians started to earn and save more.

The cost of overseas education might look like a big financial ask but if you need to give your child’s dreams wings to fly, you can’t be bound by financial constraints. Fortunately for you, there are life insurance products that can take you there, especially child insurance plans.

Child insurance plans, like other life insurance savings plans, not only provide your family with life insurance protection in your absence, but also help your money grow. If you are seeking rapid growth for your investments for your child’s higher education abroad, when buying an insurance plan for your child, among child plans, consider unit linked insurance plans (ULIPs). Like other child plans, they provide life insurance protection to the child and invest the money in a mix of equity and debt investments.

When you invest in a child ULIP, like any insurance plan for the child, it will provide life insurance coverage so that the child’s higher education isn’t impacted. At the same time, since a very significant portion of the life insurance premium can be invested in equity-oriented ULIP funds, child ULIPs can provide parents, high long-term growth of money that typically arises from equity investments. Since life insurance products, especially ULIPs, have terms of 10-30 years, they are the perfect vehicles for saving money for overseas education. There is also another benefit arising out of the long term nature of ULIPs.

When you stay invested in a ULIP for a long period of time, say 10 years, life insurance companies typically provide you with loyalty additions. These payments are a percentage of the fund value. After the first payment, they are provided at regular intervals, of say, 5 years. Consequently, thanks to your long term investment you get to save even more thanks to loyalty additions. Over the long run, this can make substantial additions to your final savings amount.

Additionally, for child ULIPs, in the event of the unfortunate death of the insured person, all future premiums payable are waived off and the lump sum of these future premiums is credited to the chosen investment fund. This allows the fund value to continue to grow as planned and this is paid to the child on maturity of the policy.

To save ample amounts in ULIPs for your child’s higher education abroad, you need to buy it early so that you can take the most advantage out of it. Sure, you do get educational loans, but for overseas education, there is the upper limit of Rs 20 lakh and you will typically need collateral.

You also need to remember that there is intense competition for the limited scholarships that are available. Ample savings would also help you avoid options such as a loan against property and dipping into your retirement funds, the two popular options in such cases that typically put pressure on your finances in the future.

For generations of Indians, studying abroad has been the preserve of the wealthy. For some years now, this has given way to Indians who are working hard to save enough for their children’s higher education abroad. Join their ranks. With child plans like child ULIPs, you get the helping hand you need to ensure that the dream of child’s overseas higher education goes way beyond being just a dream and gets realised too.