Children Savings Plans
As a parent, you want to provide the best future for your children. This can be quite a demanding task with the rising inflation and changing lifestyle. Most items and objects that are associated with your daily life have continued to become more and more expensive over the years including housing, fuel, clothing and common foods like pulses, vegetables and eggs.
The rising cost of inflation may make it very tough for the coming generations to manage the varied demands of their lifestyles. However, you have the opportunity right now to work towards making it easier for your children in the future. By planning in advance and investing your money smartly, you can indeed secure your children’s future and help them fulfil their dreams.
Key benefits of children savings plans:
There are several benefits of children savings plans, such as:
- Dual advantage of savings and life cover: These plans offer the dual benefit of savings and life insurance. They help you save for your children’s future and, at the same time, ensure their financial security in case of an unfortunate event.
- Emergency funds: These plans can be used in case of a financial emergency. They let you make partial withdrawals that you can use for any immediate needs.
- Financial security: In case of an unfortunate event, savings plans for children provide a lump sum payment in the form of the claim amount. Additionally, the plan continues to be active and the life insurance company takes care of all future premium payments. The payout received at the end of the policy term ensures that your children’s dreams are fulfilled, no matter what.
- Tax benefits: These plans also offer tax benefits on the premiums paid up to ₹ 1.5 lakh in a financial year under Section 80C. The payout received at the end of the policy term is also tax-exempt under Section 10(10D) of the Income Tax Act, 1961
There is a loan facility also available on selected products of savings plan for children.
Why is it important to save for your children?
Saving for your children can make a big difference in their lives. Most importantly, the rising costs due to inflation can be beaten with the right planning. Furthermore, a corpus can protect your children from any financial disasters in case of an emergency.
Ultimately, by saving for your children now, you will be helping them in almost all important periods of their lives. From the quality of education that they receive to becoming independent and starting something of their own, saving for your children provides them with a solid foundation that boosts their confidence. The money that you save for them acts as a safety blanket and helps them start their adult lives in the best manner possible.
With the benefits received from the policy, ensure quality education for your child, no matter the cost.
How do children savings plan work?
Saving plans for children offer you two main benefits. These plans help you save money for your children’s future needs and also help protect them financially in case of an unfortunate event. Here is an example to show you how these plans work:
Sachin bought a children savings plan and invested regularly to save for his daughter’s college education. At the end of the policy term, Sachin can use the maturity amount to pay for her further studies. In case something unfortunate happens to Sachin during the policy term, the claim amount will help to ensure that his daughter can continue with her education and fulfil her dreams.
The right time to start saving for your children
The right time to start saving is now as the benefits of starting to save early are manifold. The sooner you start saving, the more you can provide for your children eventually. Time is your greatest ally, and even if you save small amounts now, they will automatically accumulate into a large corpus over time. The returns that will be generated on any investment that you make now may increase in the long run – that’s the power of compounding and you need to take full advantage of it. It is a prudent decision to start saving for your children as soon as possible. In this way, you can ensure that every financial aspect of their lives is accounted for. However, it is never too late to start saving. Even if you start saving in your children’s formative years (1-8 years), you can accumulate enough money to help them once they grow older and their expenses increase.
Tips to save money for your children’s future
- Start early: The sooner you begin, the more you can save. A longer term helps to earn better returns. Starting early also means that you can save smaller amounts regularly, which also makes it easier on your pocket
- Be regular: Always deposit amounts as and when you can, instead of waiting until you have a large amount. Saving regularly also helps you to accumulate money that can support your children’s dreams
- Look for added benefits: When opting for a life insurance plan, look for a plan that offers added benefits, in the form of bonuses. This will enhance your overall earnings
- Don’t exceed your budget: The amount that you decide to save for your children should fit comfortably within your budget. If you exceed your budget, you might either end up compromising on your present needs, or find it difficult to keep saving regularly