In the era of rising costs, we all know how crucial it is to plan one\u2019s finances. Education loan is something which if not planned well can prove to be a costly affair. A lot of students plan to study abroad and it is in this light that financial planning for education takes centre stage. <\/p>\n\n\n\n
Financial Planning is the process of understanding one\u2019s financial situation and accordingly building a financial plan to achieve the desired goals. An important part of financial planning is taking education loan insurance<\/strong><\/a>. In this blog, we are going to understand the importance of education loan insurance in one\u2019s financial planning strategy.<\/p>\n\n\n\n A student planning to study abroad has to consider a lot of expenses like travel and accommodation expenses, tuition fees, etc. In such a situation, it becomes prudent that one gauges his or her expenses from time to time. This entire process of understanding one\u2019s financial situation and aligning expenses with your budget is nothing but financial planning.<\/p>\n\n\n\n Financial planning helps you in achieving your educational goals without hurting your financial situation. With a strong financial planning strategy at your end, you can easily finish your education at a college of your choice.<\/p>\n\n\n\n It is considered a wise move to have education loan insurance in your strategy when you are taking a hefty loan amount. Let\u2019s understand how education loan insurance plays an important role in your strategy.<\/p>\n\n\n\n It may happen that while taking an education loan, you may be worried about repaying it back in unforeseen circumstances. This discourages people from taking hefty loans. However, if you have insurance for your education loan you wouldn\u2019t be so worried. In this manner, education loan insurance plays a very crucial role in encouraging one to pursue higher education without having any financial concerns.<\/p>\n\n\n\n Including education loan insurance in your strategy will also help you in tough times like a physical disability. In case a student suffers a permanent disability due to any unfortunate events then the insurance company will pay the outstanding loan amount for the student. This saves the student from any kind of financial stress in difficult times.<\/p>\n\n\n\n The better the coverage of your education loan insurance, the more peaceful you\u2019ll be in your mind. Death and terminal illness of the applicant are covered under almost every education loan insurance but there are a few insurance policies that also provide coverage for critical illnesses such as cancer, heart attack, stroke, paralysis, and so on. In such a situation the borrower may not be able to make regular payments due to medical expenses and the insurance company will pay the remaining loan amount after passing the claim. However, before buying insurance, you must check what is covered and what is not covered in your insurance as this will help you make better decisions.<\/p>\n\n\n\n In most cases, parents are taken as co-applicants for both secured and unsecured education loans. In case of any unanticipated situation when you are unable to repay the loan, the liability will not shift on the co-applicant in case you have education loan insurance. The insurance company will be paying the entire outstanding amount of the education loan instead of the co-applicant.<\/p>\n\n\n\n There are some Income Tax benefits of including education loan insurance in your strategy. On taking an education loan insurance, you can claim a deduction for paying the insurance premiums under section 80 (C) and section 80 (E) of the Income Tax Act of 1961.<\/p>\n\n\n\n Also Read: You may also be interested in knowing about the differences between education loan refinancing and loan consolidation. To know about the difference between both you must check our blog: <\/strong>Education Loan Refinancing Vs. Loan Consolidation: Choose the Better Option<\/strong><\/a><\/p>\n\n\n\n Insurance is always a good option to have whether it\u2019s life insurance, health insurance, or education loan insurance. Let\u2019s discuss the pros and cons of including education loan insurance in one\u2019s strategy.<\/p>\n\n\n\n Here are a few pros of including education loan insurance in your strategy:<\/p>\n\n\n\n Here are a few cons of including education loan insurance in your strategy:<\/p>\n\n\n\n Also Read: <\/strong>If you want to know more about the prevention strategies for education loan default then you must read this blog: <\/strong>Education Loan Default: Causes, Consequences, And Prevention Strategies<\/strong><\/a><\/p>\n\n\n\n It is mandatory to take insurance on education loans in case of unsecured loans from NBFCs and private banks. And in cases where it\u2019s not mandatory, taking it only helps and saves the co-applicant from liabilities.<\/p> <\/div> The advantages of taking education loan insurance include: The premium amount for education loan insurance is between 0.5% – 2% of the total loan amount and may be different for each bank and NBFC.<\/p> <\/div> <\/div>\n\n\n\n This blog was all about the role of education loan insurance in your financial planning and strategy. To know more about education loan insurance, the best international bank accounts for students<\/strong><\/a>, forex and banking experience for global students, or international money transfers<\/strong><\/a>, reach out to our experts at 1800572126 to help ease your study abroad experience.<\/p>\n\n\n\nTable of contents<\/h2>
Why is Financial Planning Important For Education?<\/span><\/h2>\n\n\n\n
What Role Does Education Loan Insurance Have in Your Strategy?<\/span><\/h2>\n\n\n\n
Encourages You To Pursue Higher Education<\/span><\/h3>\n\n\n\n
Saves You in Tough Times<\/span><\/h3>\n\n\n\n
Offers Peace of Mind and Security to Borrowers<\/span><\/h3>\n\n\n\n
Reduces Liability on Your Family Members <\/span><\/h3>\n\n\n\n
Income Tax Benefits<\/span><\/h3>\n\n\n\n
Should You Take Education Loan Insurance?<\/span><\/h2>\n\n\n\n
Pros of Including Education Loan Insurance in Your Strategy<\/span><\/h3>\n\n\n\n
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Cons of Including Education Loan Insurance in Your Strategy<\/span><\/h3>\n\n\n\n
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FAQs<\/span><\/h2>\n\n\n\n