Your child’s dreams don’t come cheap. Engineering, medicine, MBA, or even studying abroad—today’s ₹15 lakh degree could easily cost ₹30–40 lakh in just 10 years. Education inflation in India hovers at nearly 10% annually. That’s faster than your salary increments.
So here’s the hard question: If you weren’t around tomorrow, would your child’s education still be safe?
This is where term insurance steps in—not as an investment, not as a tax hack, but as a parent’s safety net.
TL;DR
- Children’s education is one of the biggest future financial goals for Indian families.
- Education costs are rising at ~10% per year. A ₹15 lakh course today could cost ₹30–40 lakh in 10–12 years.
- A term plan ensures your child’s education fund is intact, even if you’re not there to provide for it.
- Calculate cover: 12–15× annual income + loans + future goals (like education).
- An increasing term plan or riders (like waiver of premium) can make education funding more inflation-proof.
- Buy early. Premiums rise 5–10% every year you delay.
Why Education Is the Most Fragile Goal
Think about it. If you pass away unexpectedly, your family may still manage groceries and bills with savings or support. But higher education? That can’t wait. Colleges don’t offer sympathy discounts.
A ₹1 crore payout from a term plan, invested conservatively, can generate ₹50,000–₹60,000 a month. That’s enough to sustain household expenses and set aside a dedicated fund for your child’s studies. Without it, your spouse might be forced to dip into retirement savings or take loans, delaying dreams or compromising choices.
How Much Cover Do You Really Need for Education?
Here’s a simple formula most planners recommend:
Cover = 12–15× annual income + loans + future goals (education, marriage, retirement of spouse) – existing savings.
Example:
- Income: ₹15 lakh per year
- Education goal: ₹30 lakh (today’s cost, add inflation)
- Home loan: ₹40 lakh
- Savings: ₹10 lakh
Recommended cover = (₹2–2.25 crore) + ₹30 lakh + ₹40 lakh – ₹10 lakh = ₹2.6–2.8 crore.
This ensures the education fund doesn’t collapse even if you’re gone.
Which Term Plan Works Best for Education Goals?
Not all term plans are equal. When children’s education is the priority, think of these options:
- Level Term Plan (Base Cover)
- Simple, low-cost, reliable.
- Ensures a fixed payout that can secure education.
- Example: ₹2 crore cover for 30 years at age 30 costs ~₹7,000–9,000 annually.
- Increasing Term Plan (For Inflation)
- Cover rises 5–10% annually.
- Useful because education costs won’t stay still.
- A ₹50 lakh cover today could grow into ₹2 crore by year 15.
- Waiver of Premium Rider
- If you’re disabled or critically ill, future premiums are waived.
- Your child’s education fund stays intact even if income stops.
- Critical Illness Rider
- Pays lump sum if you’re diagnosed with a major illness.
- This ensures medical expenses don’t eat into the education kitty.
Real-Life Stories: With vs Without Cover
- With Cover: Arjun, 38, had a ₹1.2 crore term plan. When he died in a road accident, the payout cleared his home loan and fully secured his daughter’s education.
- Without Cover: A Jaipur businessman skipped term insurance, dismissing it as “waste of money.” When he passed, his son had to drop out of private school.
Same country. Same risk. Two entirely different futures.
The Cost of Delay
Every year you delay buying term insurance, premiums rise 5–10%.
- At 30: ₹500/month for ₹1 crore cover
- At 40: ₹1,500–₹2,000/month for the same cover
- At 50: ₹3,000–₹4,000/month
Waiting even five years could cost you lakhs over the policy term—money that could have gone into your child’s education fund.
A Parent’s Action Plan
- Start Early – Lock in low premiums in your 20s or 30s.
- Calculate Cover Correctly – Don’t stop at “₹1 crore sounds big.” Add loans + inflation-adjusted education costs.
- Choose the Right Plan – A level plan as base, with increasing cover or riders for inflation-proofing.
- Review Every 5 Years – As your child grows, reassess costs. Update your cover if needed.
- Nominate Wisely – Ensure your spouse (or trusted guardian) is the nominee, so funds reach safely.
FAQs
How much of my term cover should be earmarked for education?
There’s no fixed split, but financial planners suggest factoring in at least ₹25–40 lakh (per child) for higher education when calculating cover. If you plan for overseas education, inflate the number further.
Is it better to take a separate policy just for education?
Not necessary. A single comprehensive term plan covering income replacement, loans, and education is usually more cost-effective than juggling multiple policies.
What if I already have child education savings plans?
Great—but those are investments. Term insurance is protection. If you’re gone, investments alone may not be enough. Think of insurance as the backup that ensures those savings stay untouched for their intended purpose.
Can education costs be inflation-proofed with term insurance?
Yes. An increasing term plan or simply opting for a higher cover than today’s estimate gives you inflation protection. For example, if education today costs ₹20 lakh, plan for ₹40 lakh cover to stay future-ready.
Conclusion
Your child’s dreams don’t deserve uncertainty. As parents, we work hard to fund those dreams. A term plan ensures that even if life takes an unexpected turn, your promise stays unbroken.
Think of it this way: A degree in engineering or medicine is not just your child’s ambition. It’s your legacy.
And a simple, affordable term plan makes sure that legacy never gets interrupted.
