How the ICICI Bank Dream Education Plan Works?
It's more like a recurring deposit where you contribute a sum each month. The minimum tenure for which you can contribute is three years. You can than choose a payout depending on your child's need either by way of quarterly or annual payouts.
Let's say you have paid a monthly installment of Rs 3000 per year for eight years. The accumulated amount could be around Rs 4 lakhs along with interest and you could have payouts of around Rs 55,000 every quarter from the eight year onwards. These are just indicatives figures and the actuals would be based on the interest rate offered by ICICI Bank.
A few positives
A few positives of the scheme is that there is safety of your investment by way of a bank term deposit. The scheme provides a fixed deposit interest rate during the tenure and there is also a loan that is available against the amount. Premature closure is allowed and the ability to pay monthly in small installments is another good positive of the scheme. You can also take periodic payments depending on the milestone of your child's education.
One cannot see too many negatives in the ICICI Bank dream Education Plan. The scheme does not attract TDS on interest earned during the investment phase. In the end , however, the interest would be taxable. Overall, the scheme is a decent scheme for meeting the education needs of your child provided you are able to maintain a disciplined approach. Flexibility to withdraw in case there is an emergency is also a good positive. It's more or less like a recurring deposit scheme with returns almost assured and little risk.