As education expenses continue to increase, it’s a good idea to start a dedicated savings plan called a child education plan. By starting early, you can afford the best opportunities for your child without financial strain.
What is a Child Education Plan in UAE?
With a child education policy, you can make investments for your child’s future, particularly in terms of their education. These plans generally include payouts at specific intervals — this could be a period of 10-20 years or the time when your child turns 18 or starts college.
Although technically investment plans, they also include an insurance component. This offers financial protection against unforeseen events, which ensures that your child's education is not compromised in any scenario.
By investing in a child education plan, you not only secure your child's academic and career prospects proactively but also get peace of mind and a solid foundation for their future success.
Features of Child Education Plan
So far, we’ve understood that a child education plan is an investment instrument specially designed to help your children achieve their academic dreams. However, besides guarding their educational pursuits, a child education plan also hosts a plethora of features including —
Create Corpus for Child’s Education — With a child education plan, you can create a financial cushion against the effects of inflation. However, keep in mind that the availability of funds will depend on the plan’s terms and conditions as well as the premium invested.
Insurance Component — If you opt for an education insurance plan, your child will get financial security in case of your absence.
In case of the untimely death of the parent, the future premiums are waived. However, the policy continues and the child receives the intended funds upon the maturity of the policy.
Savings Component — Most child education insurance plans facilitate savings as you pay regular premiums over a specified tenure. The money paid in such plans is accumulated over time and is invested by the insurance company.
Investment Component — Your funds get invested across several assets including stocks, mutual funds, and bonds. The investment vehicles depend on your risk appetite and the time horizon until the child needs the funds.
Flexible Modes of Contribution — As a parent or legal guardian, you can contribute to a child education plan in the UAE in two ways — regularly via a systematic investment plan (SIP) or through a one-time lump sum payment.
Just like any other investment plan, the mode of contribution will depend on your financial situation, options provided by the provider, and more.
Risk and Returns — The return on investment depends on portfolio performance. High-risk assets like equity funds may provide a higher return on investment than bonds, which are low-risk investments.
Option to Customise Plans — Most providers allow you to customise the plan so that you can choose the investment mix and switch between the funds as per your evolving risk appetite or market conditions.
Types of Child Education Plans in UAE
Discussed below are the types of child education plans in UAE —
Single Premium Child Education Plan — In this child education plan, you need to pay a lump sum amount as a premium. With this investment, the plan generates wealth over the specified tenure to cover the child’s future education expenses.
Since you pay a single premium, you can be saved from the hassle of arranging funds to pay regular premium instalments.
Regular Premium Child Education Plan — Here, you need to systematically pay the premium for a specified period to earn a return on investment. You can choose the contribution from monthly, quarterly, half-yearly, and annually.
Unit-Linked Insurance Plans — If you want higher and more assured returns on investment for your child, ULIPs are an ideal child education plan for you.
A child ULIP, apart from substantial financial growth, offers benefits like the sum assured in case of the parent or legal guardian’s untimely demise. In such situations, the premium gets waived and the child still gets the maturity amount once the policy matures.
Endowment Plans — This is a type of life insurance that creates wealth in a specific tenure.
Such child education plans have a saving component, which allows you to earn maturity benefits once the policy matures. They also create a life protection shield while contributing to your child’s higher education.
Why Should You Invest in a Child Education Plan?
By investing in a child education plan, you can enjoy several benefits such as —
Assured Financial Security — A child education plan reduces the dependency on education loans, thus keeping your child financially secure.
If you opt for a ULIP, your child gets a maturity benefit even in case of your absence. In fact, the premium gets waived but the corpus continues to build.
Financial Cushion Against Inflation — With rising education costs, it’s important to save funds for your child’s higher education in advance. This is where a child education plan comes to the scene.
You get to earn a corpus to secure the child’s future, which saves you from making major dents in your savings.
Flexibility — These plans are flexible when it comes to withdrawals, contributions, and using funds for a career that your child wants to pursue. Different types of child education plans offer the flexibility to choose a policy that suits your needs. You have the option to select the sum assured, policy tenure, premium payment period, frequency, and add-ons.
Premium Waiver Benefit — The premium waiver benefit distinguishes these child investment plans from other options.
If the parent passes away during the policy term, the insurer takes over the payment of the premiums. This ensures the coverage continues for the remaining tenure.
Insurance and Investment in One — Child education plans combine savings and insurance in one package.
The life insurance part provides financial support in case of a parent's untimely death and covers unexpected emergencies. The savings component, meanwhile, helps you build a fund for your child's future needs.
How Does Child Education Plan UAE Work?
Before talking about how a child education insurance plan works, it’s important to understand when you should invest in one. Child investment plans usually include life insurance and opportunities to grow your wealth over time. Here’s how they work —
Payment of premium: Depending on the plan, you might need to pay a lump sum or regular premiums (monthly, quarterly, half-yearly, or annually) to keep it active and earn interest.
Sum payouts: After a set period or a milestone, you will start receiving payouts. When your child starts higher education, you can use these funds for tuition fees. Note: Some child investment plans in the UAE can be converted into term insurance after your child completes their studies (read terms and conditions).
In case the parent passes away: If the parent dies before the policy tenure is completed, the insurance component will kick in. This way, the premiums might be waived without affecting the policy.
When Should You Invest in the Best Child Education Plan in UAE?
Although there are no age restrictions to buy a child education plan, you should ideally invest in an education plan as early as possible. This is because —
Starting early lets your money grow more through compound interest
Investing early and consistently helps you save an amount each month for education
Early investing allows for better long-term planning and adjustments
Starting early creates a buffer for unexpected expenses and secures your child’s education finances
Best Child Education Plan in UAE
Mentioned below are the top child education plans in the UAE that you can look into —
MetLife Educare
Here are the features of this child education insurance policy —
Tuition fees guaranteed twice a year
Assured post-graduation payout to provide your child with a new start
Additional bonuses in case the investments perform well
Comprehensive child care coverage including
Daily in-hospital income
10-year education allowance
Second medical opinion
Citibank Education Plan
This education insurance plan is designed to secure your child’s future even in your absence. Here are the key features of this plan —
Flexible plan that allows you to increase the premium for additional cash flow
Choice to withdraw and partially surrender the plan if you need to finance short-term capital requirements
Choose the range of investment funds as per your risk appetite
Option to operate the plan in a wide range of currencies
Standard Chartered Global Choice Child Education Plan
This is a hybrid investment and life insurance plan to secure your child’s higher education. Have a look at its key features and benefits below —
Guaranteed capital protection
Life insurance and investment in one place
Option to create a portfolio of up to 30 mutual funds
Customise your portfolio when required
LIC International Child Education Plan
This is a non-linked participating limited premium endowment plan with the following key features and benefits —
Death benefit paid in case of the life assured’s untimely demise
Basic sum assured for the life assured along with accrued guaranteed addition on surviving the policy’s maturity
Optional benefits including premium waiver benefit rider
FAB EduPlus
This education insurance policy covers your child’s education expenses — you can get coverage for tuition fees, textbooks, transportation fees, additional coaching class fees, and more. Here are the key inclusions of this plan —
Accidental death cover
Hospital cash expenses reimbursement due to accident (up to 60 days)
Extra-curricular activities
Dependent child protection
Loss of child’s documents
Family relocation expenses
Educational institution transfer documentation expenses
How Much Should You Invest in a Child Plan?
Short answer: As per your specific requirements!
As with any investment instrument, how much money you should invest depends on your future plans and requirements. In this case, you will need to consider factors like -
Cost of education
Current savings
Education inflation
Other investments, if any
For instance, if you plan to send your child abroad for college education, you will need to invest more than a person who doesn’t have any such plan.
Education Inflation
The UAE is widely known for its world-class education system. However, this can reflect in the fees as well.
Adding to it is education inflation, i.e. the increase in costs related to education.
In Dubai, for instance, the authorities declared the Education Cost Index (ECI) of 2.6% for private schools for 2024-25.
However, this is not the final inflation figure. The actual increase in the fees will be different based on the school’s inspection.
Here’s how much the schools can increase the fees this year —
Didn’t show any improvement in rating: ECI x 1 = 2.6%
Moved from ‘very good’ to ‘outstanding’: ECI x 1.5 = 3.9%
Changed from 'good' to 'very good': ECI x 1.75 = 4.55%
Moved from ‘weak’ to ‘acceptable’/ ‘acceptable’ to ‘good’: ECI x 2 = 5.2%
As per this rating, schools in Dubai can increase fees by up to 5.2%.
Such increases, over time, can significantly increase the total education costs. For this reason, education inflation must also be considered while investing.
Documents Required to Invest in Child Education Plan
Here is the list of documents required to invest in a child education insurance policy —
Complete proposal form
Applicant’s identity proof
Address proof like rent agreements or lease
Applicant’s age proof
Income proof
Tips to Choose the Best Child Education Plan in UAE
Begin Investing Early — Start investing as early as possible, especially for a child education plan.
Early investments build a larger fund for your child's higher education. In fact, it also benefits from compounding, increasing your wealth over time.
Factor in Economic Variables — Consider future economic factors like inflation, rising education, and healthcare costs when deciding on the sum assured. This ensures you have enough funds for your child's education.
Special Attention to Terms and Conditions — Carefully review the terms and conditions of your child education plan to avoid confusion later. This helps you choose the best plan for your child's needs.
You can compare various options on our website to find the right policy.
Look for Plans with the Premium Waiver Benefit — Select a plan with a premium waiver so that your child's future is secured even if you're not there to support them. With this option, you can ensure that further premiums are waived in case of the parent’s death — the plan continues to remain in effect.
Opt for Policies Allowing Partial Withdrawals — Choose an education insurance policy that allows partial withdrawals. This can be useful to handle emergencies without compromising your child's future education.
Choice of Fund — Understand your needs, financial capabilities, and education inflation before choosing a child investment plan. For better returns, consider ULIPs, endowment plans, or equities — later, you can transfer funds to safer options.
Choosing the right fund is crucial to avoid losses and generate significant returns.
Frequently Asked Questions
When is the right time to invest in a child education plan?
You should start investing early in a child education plan as these plans earn compounded returns.
How much should you invest in a child education insurance policy?
Your premium depends on your risk appetite, inflation rates, and more. You should also create a financial blueprint for the future.
Why is it essential to invest in a child education plan?
With increasing education costs, investing in a child education insurance policy is important. Your child gets benefits as per the inflation rates and the premium you pay.
When should you withdraw money from the child education plan?
The fund withdrawal usually depends on the terms and conditions of the plan. It is usually advised not to withdraw the money as these plans offer maturity benefits.
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