One of the most important aspects of raising a child is ensuring that they are prepared for the future. When it comes to saving plans in India, there is no greater investment plan than in a child’s future.
A child investment plan helps children follow their pursuits in whichever field they choose. These plans come with a life cover and opportunities to maximise savings on the payment of due premiums. The lump-sum amount at the end of the policy term ensures that neither you nor your kid struggles for capital to finance higher education.
There are several investment plans for child for you to look at when it comes to saving for your child’s secure future.
What to look for in investment plans for child?
Insurance for children is a must. Children are dependent on their parents to meet their basic needs, and they should not be left to struggle in the event of a parent’s death.
If you are a parent, don’t overlook the importance of insurance for your children. A child’s life is full of uncertainty, from medical bills to educational expenses, and it’s essential to make sure they are protected should the worst happen.
A range of different saving plans in India are available that can help you keep your child safe. Some of the most popular include market-linked policies and traditional endowment-based plans, which offer periodic payouts or lump sum payouts depending on what you prefer.
Investment plans for child come in many varieties, but there are some important factors that you should consider before choosing one:
- Eligibility requirements: Some plans won’t cover children who are not yet 18 years old. Others require that your child is under 21 years old. Some plans also require that your child be unmarried.
- Premium rates: Premium rates vary depending on how old your child is when you sign up for the plan and what type of plan you choose (i.e., monthly payments, yearly payments). The older your child is when you sign up, the more expensive the premium will be—which makes sense because older children generally cost more to insure than younger ones do.
- Periodic payments: If you choose an endowment-based policy or a traditional endowment-based policy, then periodic payouts may not be an option (if so then lump sum payout will be available instead).
Child saving plans in India
As we understood how to choose the right saving plans in India. Let’s explore some of the plans that are suitable for providing a good future for your child. These plans will take care of your child’s future and provide good returns on investment. So it becomes a double bonanza as an investor and a caring parent.
Let’s look at them and understand the benefits of these plans.
1. Life Insurance
Life insurance has different purposes. Some can provide you with a regular income while some act as a security for your loved ones in your absence. One of such plans is Smart Junior Plan by Canara HSBC Life Insurance. It guarantees a payout during the last 5 years of the policy that can be used for the child’s future. It even pays you an annual bonus or final bonus based on the maturity of the plan.
2. Sukanya Samriddhi Yojana
If you have a girl child, then Sukanya Samriddhi Yojana is one of the best saving plans in India. It was introduced by the Govt. of India under the Beti Bachao Beti Padhao scheme. It offers one of the highest rates of return 7.6% per annum. You can start an account under your girl child’s name, the maturity tenure of the plan is 21 years. Upon maturity, the amount can be utilized for the higher education of your girl child.
Investing in an SSY saving plan comes with tax benefits as well. Under section 80C of the income tax act, your contribution can be availed for income tax benefits.
3. Public Provident fund
PPF is the best tax-saving instrument, but many don’t know that it can be to be one of the best investment plans for child. The public provident fund has a lock-in period of 8 years and can be extended to 15 years. It simply means that if you open a PPF account after your child completes his secondary school, you can get a very good return by the time they are ready for higher education. The PPF gives a decent return of 7.1% per annum. It is a non-participating plan and falls under the exempt-exempt-exempt category.
The well-known benefit of PPF is a 1.5 lacs tax deduction under section 80C of the income tax act.
4. ULIPs
A ULIP is not a traditional plan, and the returns are determined based on market conditions. The sum assured would be paid in a lump sum to the child in the case of the death of the parent. Upon its maturity, the fund value will be waived as well as all future premiums.
In addition to delivering a variety of funds, ULIPs provide both aggressive and conservative funds. A ULIP scheme provides the option to switch funds between equity and debt without paying taxes on that change.
5. Endowment plans
An endowment policy could also be used as a child plan operational instrument. With this policy, you’ll receive a lump sum payment plus bonuses upon maturity. The advantage of this is that it can be used to prepare for your child’s higher education costs, etc. It differs from ULIPS, however, in that it offers a least-guaranteed payment option.
Final Words
As a parent, you are responsible for the future of your child. You must financially equip them to tap the opportunities that will come their way.
There are many variants of child investment plans as per your budget and needs; thus, it is always advisable to compare insurance quotes from various insurers. An online comparison makes it easy for you to match quotes with your specific needs and go for the best child education plan.
There are a number of options for you to look at when it comes to saving for your child’s secure future.