Studying abroad is a dream for many students, but the costs can be overwhelming. From tuition fees to living expenses, pursuing education in a foreign country often requires substantial financial planning. While scholarships and loans are common ways to fund international studies, an unlikely ally can play a crucial role in this journey—a term plan.
With its affordability and wide-ranging term plan benefits, term life insurance can be a financial backbone, ensuring that your family’s financial goals, including your education, remain secure even in uncertain times. Here’s how term life insurance can contribute to studying abroad and why it’s a valuable tool in financial planning for education.
The Cost of Studying Abroad
The expenses associated with studying abroad can vary widely depending on the country, university, and course. Key costs include:
- Tuition Fees: Typically ranging from ₹10 lakh to ₹50 lakh or more per year.
- Living Expenses: Accommodation, food, transportation, and health insurance can cost an additional ₹10 lakh to ₹20 lakh annually.
- Miscellaneous Expenses: Application fees, visa costs, and travel expenses can add up significantly.
Given these costs, parents and students often rely on education loans, savings, or scholarships. A term plan can complement these efforts, providing financial protection and support in unexpected scenarios.
How a Term Plan Supports Education Goals
Covers Education Loans
Education loans are a common way to fund international studies, but they also represent a significant financial responsibility. If a parent or primary earner passes away, the burden of repaying the loan can fall on the student or surviving family members.
With a term plan in place, the sum assured can cover the outstanding loan, ensuring that the student can focus on their studies without financial stress.
Example: If a parent takes a ₹50 lakh loan for their child’s education and secures a term plan with an equivalent sum assured, the family is protected from financial hardship in the parent’s absence.
Ensures Continuity of Education
Studying abroad often requires long-term financial commitments. A term plan guarantees that the required funds remain available even if the primary earner is no longer there to provide support.
The payout from the term plan can cover tuition fees, living expenses, and other costs, ensuring the student completes their education as planned.
Affordable Coverage for High Financial Goals
One of the biggest term plan benefits is its affordability. Term insurance offers high coverage at low premiums, making it accessible for families planning to fund expensive education goals.
For example, a parent in their 30s can secure a ₹1 crore term plan for as little as ₹1,000 per month, providing peace of mind that their child’s future is financially secure.
Tax Benefits on Premiums
A term plan also offers tax benefits under Section 80C of the Income Tax Act. Parents paying the premiums can claim deductions of up to ₹1.5 lakh annually, reducing their overall tax liability and freeing up funds for education-related expenses.
Using Term Plan Benefits Strategically
Combining with Savings
While a term plan provides financial security, it can also complement your savings and investment strategy for studying abroad. Families can allocate their savings toward application fees, tuition deposits, and initial travel costs while relying on the term plan for larger, long-term commitments.
Adding Riders for Enhanced Protection
To maximise the benefits of a term plan, parents can consider adding riders that address specific risks. For example:
- Critical Illness Rider: Covers major medical expenses, ensuring that healthcare costs do not impact education funding.
- Accidental Death Rider: Provides additional payout in case of accidental death, offering enhanced financial protection.
These riders ensure that the term plan remains robust, catering to a broader range of financial risks.
Securing the Student’s Future
Parents can purchase a term plan not only to cover their own lives but also for the student’s financial protection. If the student is earning part-time or has taken on financial responsibilities, a term plan ensures that their future remains secure.
The Psychological Benefits of a Term Plan
A term plan doesn’t just provide financial security—it also offers peace of mind. Knowing that your family’s financial goals are protected can alleviate the emotional burden of planning for a major milestone like studying abroad.
For parents, it ensures that their child’s dreams are not derailed by unforeseen events. For students, it provides the confidence to focus on academics without worrying about financial uncertainties.
How to Choose the Right Term Plan for Education Goals?
Assess the Coverage Amount
Calculate the total cost of education, including tuition fees, living expenses, and additional costs. Opt for a sum assured that covers these expenses along with any outstanding loans or liabilities.
Consider a Long-Term Policy
While a 5-10 year policy may suffice for immediate education goals, a longer-term policy can provide continued protection for other financial milestones, such as higher education, marriage, or career support.
Compare Plans Online
Use online tools to compare term plans based on premiums, coverage, and benefits. Look for plans that offer flexibility and riders to customise coverage according to your needs.
Review the Claim Settlement Ratio
Choose an insurer with a high claim settlement ratio, ensuring that claims are processed efficiently and your family receives the benefits without delays.
Limitations of Relying Solely on a Term Plan
While a term plan provides invaluable financial protection, it should not be the sole component of education planning. Families should also:
- Build a dedicated education fund through savings or investments.
- Explore scholarships and grants to reduce overall costs.
- Consider education-specific insurance or loan protection policies for added coverage.
Conclusion
A term plan may not be the first thing that comes to mind when planning to study abroad, but its role in safeguarding education goals is undeniable. By offering financial protection, covering education loans, and ensuring continuity of education, a term plan becomes a powerful ally in turning international education dreams into reality.
With its affordability and wide-ranging term plan benefits, term insurance is not just a safety net but a strategic tool in achieving long-term financial goals. Whether you’re a parent planning for your child’s education or a student preparing for the future, investing in a term plan can provide the financial security and peace of mind needed to focus on success.
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