Child Investment Plans in UAE

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.

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. 

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

Mentioned below are some simple 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.

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