Child Education is the primary goal of any parent. Therefore, most parents begin planning and saving for their children at an early age. But parents must also learn to evaluate the price target for their child’s education. Additionally, you must always keep in mind how to achieve your objectives within a pre-decided time limit. This is why most contemporary corporates are coming up with such insurance plans with ULIP features. This ensures greater returns upon market investments. However, such plans also involve a lot of risks as the market conditions are extremely volatile.
Hence, these steps can help you along the way to plan a successful education plan:
Step 1: The Target Time
The initial step is to calculate the target dates for your child’s education and set up a goal accordingly. For example, you may feel that the average age a child starts to pursue higher education is between 19-23 years. Your target date depends on many factors, such as career expectations and circumstances.
Step 2: Determine an Objective Amount
The next step will be to calculate your child’s education cost as per today’s rates. All of us have various aspirations for our child’s education. Children education plan must factor in the course aspirations such as MBA, Engineering, etc. and their course structure and fees.
For instance, you might feel that an average MBA course for two years would require Rs. 10 lacs as an investment and hence will have to plan accordingly.
Step 3: Calculate the Amount at the End of Maturity Period You Want
In the subsequent step, you will have to keep the above two factors in hindsight. Based on your objectives and the amount required, you must calculate a sum that you need in the end. To achieve this objective, you need to factor in various fluctuations such as a rise in the cost of education, inflation, marketability of policy, etc. The best way would be to look at past trends and fixate a percentage window for all your costs. These calculations would help in computing the requirements of income and savings today to meet future demands.
Step 4: Analyse the Return on Investments
This is an essential step for any investor in a children education plan because the appetite of risk and the knowledge about various factors is different in every individual. This, therefore, affects the requirement and policy selection. It also affects the risk to reward ratio that is favourable for you. Accordingly, you can calculate the return on such investments and select a policy that is deemed most favourable for you.
Step: 5 Calculate a Favorable Premium Rate
Based on the calculations described above, you can quickly determine the exact amount suitable for your conditions. Your contributions are a portion of your income; so, it is crucial to understand as to how much money can you set aside for a premium every month.
It is essential to keep these steps in mind for a successful selection of a children education plan. A policy that is planned and executed gives the right returns for you to meet your child’s education goals.