The rate of education inflation in India has already risen from 3.34% in September 2021 to 5.68% in September 2022. This is happening due to various reasons. As the educational system becomes increasingly advanced with time, modern learning equipment are required which are expensive. Also, with rising construction and facility costs and state funding cuts make education costly. However, finances should never come in the way of your child’s bright future. Therefore, it is important to plan how to fund quality education for your child in India or abroad. To know that, here’s a look.
Assess Your Current Financial Position
Determine your capacity the invest in a child plan. For that, deduct your regular expenses and other financial liabilities from your income and consider allocating 20% of the remaining funds to the plan. This is just an example. You can choose a budget that suits your investment capital.
Determine How Much You Have to Save
There are many factors that you need to consider to figure out how much money is needed to finance your child’s education. Here are the most common factors:
- The stream of studies your child would like to pursue
- Tuition fees
- Cost of learning material
In case your kid decides to study abroad, you also need to factor in the rent and living cost of the place of stay.
If you can’t calculate the required corpus manually, consider using a child education planner. It gives you results based on other important factors as well like:
- The anticipated age when your kid may require the corpus
- The rate of inflation over the coming years
Once you calculate the needed education corpus, it can help you determine how much you must save yearly in a child plan to meet your goal.
Choose a Suitable Plan
Opt for a child life insurance policy in India that also acts as an education plan and offers the following benefits:
- Tuition Fee Support (TFS): See if the policy gives an annual payout to finance coaching class fees or extracurricular activities of your child between ages 13 and 17.
- Higher Education Reserve (HER): Once your son or daughter turns 21, he/she is prepared to pursue higher studies. So, check whether you can use the policy to manage the post-grad expenses of your child.
- College Admission Fund (CAF): See whether the child life insurance policy in India offers a lump sum amount to fund your kid’s dream of studying at a leading institution. Therefore, your child can choose a course, college or university of his/her own choice without any financial constraints.
Also, look for other benefits like flexible premiums and a death benefit (on the demise of the life insured).
Make sure to start investing early in a suitable child life insurance policy in India that comes with the above benefits and choose a reputed insurer. The earlier you start saving, the more time will you get to multiply your savings manifold over the years. Just ensure not to use your child’s education corpus for any other financial goals.
