How to Tackle the Rising Cost of Education in India

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How to Tackle the Rising Cost of Education in India

Education holds a significant place in the structure of Indian society; people are even willing to spend any amount of money on their children’s education. Today, we see education costs rising high in our country and the situation has become alarming. it reveals that the overall cost of education charges has grossed up by over 150% current year as compared to the previous year as stated by the Assocham survey. This means that more parents should be planning and saving for their children’s education in college hence the need to start early.

To overcome this, what do you do to manage and cope with this ever-increasing cost of education endowments? One such way of investing is the term insurance plan where a certain sum is paid to the nominee on the death of the policyholder. As opposed to the current pension solutions, these plans do not only come as an investment avenue to secure one’s future but also the children to cater for education costs.

This article highlights, how as parents, you can tackle the rising cost of education and provide quality higher education to your children:

Step-by-Step Guide: Managing the increasing cost of education

Step 1: Check Your Finances

But before you can even think of an investment plan, you need to evaluate your current financial position. Analyze all your incoming and outgoing flow of cash including the amount you save. Make a list of all your sources of income list all proposed expenses and plan your budget. This will assist you in being able to identify areas where you need to slightly tighten your belt to save more money.

Step 2: Start planning early to avoid difficulty

Begin by listing some of the most demanded occupations and their costs. This will help you to know how much funding you need to source to get to the required level of funding. The best way to start is by using a term insurance plan calculator. it assists you in establishing how much you should set aside for your child’s college education requirements based on the inflation rate and the number of years to college.

Step 3: Buy a Term Insurance Plan

After you have a good understanding of your financial status and your educational funding needs, it is now time to buy term insurance. This is economical in that apart from the plan offering life insurance it also provides for your child’s education.

So, it is always advised to invest in a term insurance plan so that the education fund for the child remains untouched due to any mishap. Concerning the aspect of the premium protection option, the investment plan continues and the insurer pays out any remaining premium costs.  Also, your family will get the life cover sum assured and your child will get the maturity value as planned.

Step 4: Avoid Withdrawals

To get the best returns on your education fund, do not make any withdrawals that are not necessary. Investing and leaving your money to grow without interference is a way of reaping from compounding. However, there can be instances that the term insurance plans can permit partial withdrawal, thus, it is wiser not to make partial withdrawals very often even if allowed.

No, there should be a different account for an emergency and the child’s education expenses. It is helpful if one always saves a part of his or her salary for any unforeseen circumstances and the money should be kept in money markets or cash.

Step 5: Stay in Touch with Your Plan

Buying the best life insurance policy is not the end of it. It is also important to review and check on the plans from time to time. Occasionally, it is important to evaluate whether the plan is meeting the expected results and how the invested money is faring. This will assist you in making the right decisions on the need to change your investment plan.

This way, you can avoid or mitigate risks and act according to the market conditions by frequently reviewing your plan.

Real-World Scenarios: How Term Insurance Plans Can Help in Meeting the Financial Needs of an Individual.

Scenario 1: Mr Sharma Protects His Child’s Education

Mr. Sharma got the idea that the fee for education in India was increasing, and he did not want his child to suffer from financial problems in the future. He bought a term insurance plan after he acquired a child and has been contributing to the policy’s premium payments. In the case of Mr Sharma, the maturity value of the plan refers to the fact that, as the child was growing, and ready to go to the university, the amount for the fees would have been available and one wouldn’t have to worry where the money would come from.

Scenario 2: The Sorrowful Story of Ms Patel’s Premature Death

One should always work under the assumption that ‘the worst can happen anytime’ which is why it is advisable to have a backup plan. Ms Patel, a single mother, had purchased a term insurance plan that she wished to help her child with educational expenses. Sadly, she died a natural death one day. However, because of the premium protection option in her policy, her child’s education fund was not affected and they can still follow their dreams.

Conclusion

The cost of education in India has gone up and this makes parents to be very proactive in their financial planning. This is where investing in term insurance plans can be useful in directly addressing this problem. To ensure that your child’s education is financially secure, you should evaluate your financial situation, begin planning early, buy a term insurance plan, avoid premature withdrawals, and review your plan periodically.