What Should Be Considered In A Child Education Plan


child education plan

A child education plan is essentially a financial tool providing both immediate protection and investment return for your child. For both protection and investment, these plans are often referred to as child protective schemes. These are usually implemented as a part of pre-school education, though it is not uncommon to find them being implemented as a part of childhood education as well. These schemes aim to provide security, while also ensuring children receive the education they deserve.

Protection For Kids Education Plans

Protection for your child education plans typically consists of two separate parts; primary protection, which pay for the policy itself; and secondary protection, which pay for any financial corpus invested by the policy holder within this period. The primary protection plan will pay a fixed amount, regardless of current circumstances, for each term. This will normally last between four and eight years, during which time the insured child education plans financial corpus will be developed and maintained.

Investments within the child education plans are not solely directed towards meeting the cost of re-occurring fees. They can also be directed towards paying off any outstanding debts. Most policies will require that payments towards the financial corpus be made annually, semi-annually, or annually plus half a year. During this period, the financial corpus will be replenished by new money that has been set aside by the provider. Any additional funds that have been accumulated will be used to pay off outstanding debts.

Long-Term Educational Loans Are Also Available

A young boy using a laptop

As part of their child education plan, many providers also provide long-term educational loans. These are often called lifetime education loans. These policies will continue to pay for the child’s education needs until they reach the age of twenty-five. This means that if you were to stop paying the loan, then the policy would no longer cover these needs. Additionally, most long-term education loans are tax-deductible. The provider is required to remit income tax on any amounts received under the policy.

Long-term educational loans are not the only option available to parents wishing to finance the education of their children. Some parents choose to put their child through an adoption process. Under these circumstances, the biological mother or father gives up their parental rights and the financial corpus is used to support the adopted child. An adoption loan is then made from the adoption fund.

Finally, some parents may wish to finance the cost of their child’s higher education using alternative financial vehicles. These options can either be traditional endowments or private higher education loans. Both types of funding opportunities offer flexibility, though the former generally has a lower interest rate than the latter. In terms of the former, endowments offer a fixed monetary return; while private higher education loans are flexible, but repayment occurs on a monthly basis. If you choose to put your child through a private higher education loan program, it is advisable to consult with a financial advisor to determine the repayment program and structure that best meets your child’s needs and financial circumstances.

How To Plan

Background pattern

When considering financing for your child’s higher education needs, you must carefully assess his/her needs. Consider how long he/she plans to attend school, what type of degree or diploma they hope to pursue and what part of the country or state they wish to study. Also evaluate whether your child needs more than a regular scholarship. For instance, there are often special scholarships for low or middle-income families, depending upon your child’s expected family income after all expenses are considered. You may also consider taking out a federal Student Loan, which covers the cost of attendance up to the first six months at a standard university.

Conclusion 

If your child is going to require some type of long-term medical care in the future, you should also consider his/her needs for an adequate health plan. Health insurance plans must be tailored to meet the specific needs of your child. Many of these plans do not cover pre-existing conditions and some will pay a portion of the medical costs after the child has reached the age of 26. A more appropriate course of action is to include a long-term care planning plan in your overall child education plan. Long-term care insurance plans are more expensive than most traditional endowment plans, but they have the advantage of providing substantial protection should your child need additional long-term care in the future.

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