Child Savings Plan in India

Investing in your child's future is crucial for helping the child fulfill his/her dreams. Obviously, inflation and the increasing cost of living will make it more difficult for coming generations to manage their lifestyles. The earlier you plan the child’s financial future, the better. Definitely, to build a considerable corpus for your child, you must start investing in advance. Here, we will discuss various child savings plans that can give good returns in the long run.

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Investing in your child's future:A wise decision & a loving choice
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Best Child Savings Plan in India 

Plans Entry Age Maximum Maturity Age Minimum Investment Amount (annually) Minimum Sum assured
TATA AIA Fortune Pro- WOP 18-59 years 75 years Rs 12,000/- -
TATA AIA Fortune Pro 18-59 years 40 years  Rs 12,000/- For Single Pay – 1.25 times the
Single Premium
For Regular / Limited Pay – 7 * AP
Max Life Online Savings Plan- Child Plan 18-54 years 85 years Rs 12,000/- The minimum Sum Assured is Rs. 1,20,000
Bajaj Allianz Smart Wealth Goal- Child Wealth 18-60 years 85 years Rs 48,000/- 10 times Annualized Premium
ICICI Pru Smart Kid Plan 18-65 years 64 years Rs 25,000/- Minimum Sum Assured (Single Pay) -1.25 x Single Premium
Minimum Sum Assured (Regular Pay)- 7 x Annual Premium
TATA AIA
Capital Guarantee Solution
18-50 years 75 years Rs. 51,000/- Minimum Sum Assured (Single Pay) -1.25 x Single Premium
Minimum Sum Assured (Regular Pay)- Higher of (10*AP OR (0.5*Policy Term*AP)
Max Life Capital Guarantee Solution 18-50 years 85 years Rs. 37,200 The Minimum Sum Assured is Rs. 1,20,000
BAJAJ Allianz Capital Guarantee Solution 18-55 years 65 years Rs. 20,000 The Minimum Sum Assured is Rs. 30,000
Aditya Birla Capital Guarantee Solution 0-58 years 85 years Rs. 38,400 Minimum Sum Assured (Single Pay)- Rs.100,000
Minimum Sum Assured (5 Pay)- Rs.20,000
Minimum Sum Assured (6-12 Pay)- Rs.30,000
HDFC Life Capital Guarantee Solution 18-50 years 85 years Rs. 12,000 1.25 times the
Single Premium
PNB MetLife Capital Guarantee Solution 18-60 years 80 years Rs. 51,000 Minimum Sum Assured (Single Pay)- Rs. 100,000
Minimum Sum Assured (5 Pay): 12,000
Minimum Sum Assured (Regular Pay & 10 Pay): 12,000
Kotak Life Capital Guarantee Solution 18-50 years 99 years Rs. 21,000 10 times Annualized Premium
Edelweiss Tokio Wealth Secure Plus- Child 18-40 years 100 years Rs 24,000/- 7 x Annualized Premium
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What Are Child Savings Plans?

Child Savings Plans are financial products that offer the dual benefits of investment and insurance. These plans can help parents to build a corpus of funds for their child's future needs, such as education, marriage, or other major expenses, while providing life cover in the unfortunate event of the parent's death.

In the unfortunate event of your death, a child savings plan enables your child to receive a lump sum amount. Therefore, it could prove beneficial for the child with their education and other needs. You have the option to avail loans against the plan as well.

List of Child Savings Plans

Here are some of the best investment plans for children in India in 2023:

  1. Systematic Investment Plans (SIPs)

    SIPs are a popular way to invest in mutual funds. They allow you to invest a fixed amount of money at regular intervals, such as monthly or quarterly. Hence, it is a good way to build wealth over time, even if you can only afford to invest a small amount each month.

    There are many different types of mutual funds available. So, you can choose one that is appropriate for your child's age and financial goals. For example, you may want to invest in a children's education fund or a retirement fund.

  2. Child ULIPs

    Child ULIPs are unit-linked insurance plans that offer both investment and insurance benefits. In other words, ULIPs are a good option if you want to provide financial security for your child and also save for their future.

    Child ULIPs invest in a mix of equity and debt securities. The equity portion of the investment has the potential to generate higher returns, but it also comes with more risk. The debt portion of the investment is less risky, but it also offers lower returns.

  3. Sukanya Samriddhi Yojana (SSY)

    The Sukanya Samriddhi Yojana is a government-backed savings scheme for girl children. It offers a high interest rate of 8.0% compounded annually and provides tax benefits.

    SSY accounts can be opened for girls up to the age of 10 years. The minimum deposit is ₹250 and the maximum deposit is ₹1.5 lakh per year. The account matures when the girl turns 21 years old.

  4. Debt Funds

    Debt funds are mutual funds that invest in fixed-income securities, such as bonds. They are a good option for investors who are looking for relatively low-risk investments with guaranteed returns.

    There are many different types of debt funds available, so you can choose one that is appropriate for your investment horizon and risk tolerance.

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  5. Recurring Deposits (RDs)

    RDs are a type of savings account that allows you to deposit a fixed amount of money each month for a predetermined period of time. You earn interest on your deposits, which is compounded over time.

    As a result, RDs provide you a good way to save for your child's future expenses, such as education or marriage. They are also a good option for investors who are looking for low-risk investments with guaranteed returns.

  6. Public Provident Fund (PPF)

    The PPF is a government-backed savings scheme that offers tax benefits under 80C of the income tax and a high interest rate of 7.1%. It is a long-term investment option with a maturity period of 15 years. However, you can withdraw money from your PPF account after 5 years.

    PPF accounts can be opened by anyone above the age of 18 years. The minimum deposit is ₹500 and the maximum deposit is ₹1.5 lakh per year.

  7. National Savings Certificates (NSCs)

    NSCs are government-backed savings certificates that offer an interest rate of 7.7% compounded annually. They are a good option for investors who are looking for low-risk investments with guaranteed returns.

    NSCs have a maturity period of 5 years. However, you can withdraw money from your NSC account after 3 years.

People also read: Child Plan

Which Child Savings Plan is Right for You?

The best investment plan for your child will depend on your individual circumstances and financial goals. Definitely, if you are not sure which plan is right for you, it is a good idea to consult with a financial advisor.

Here are some things to consider when choosing an investment plan for your child:

  • Your child's age and financial goals

  • Your investment horizon

  • Your risk tolerance

  • Your budget

Once you have considered these factors, you can start to narrow down your choices and choose the investment plan that is right for you and your child.

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Invest ₹10K/Month YOU GET ₹1 Crores* For Your Child View Plans
Invest ₹8K/Month YOU GET ₹80 Lakhs* For Your Child View Plans
Invest ₹5K/Month YOU GET ₹50 Lakhs* For Your Child View Plans
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What are the Things to Consider Before Choosing a Child Savings Plan? 

Undeniably, choosing a child savings plan is a crucial decision that can significantly impact your child's financial future. Here are some things to consider before selecting a plan:

    • Purpose of the Plan: Determine the primary goal for the savings. Is it for education, marriage, a safety net, or some other purpose?

    • Duration: Consider the time horizon until you'll need the funds. If your child is very young and you're saving for college or marriage, you have a longer time frame compared to someone whose child is already in their teens.

    • Flexibility: Check if the plan allows for flexibility in terms of payment frequency, amount, and tenure. Can you increase or decrease the amount? Can you make lump-sum contributions?

    • Returns and Performance: Look at the historical performance of the plan, especially if it's an investment-linked product. While past performance isn't indicative of future results, it can give you an idea of how the plan has fared.

    • Tax Benefits: Some child savings plans offer tax benefits either on the invested amount, the returns, or both. Check the tax implications of your chosen plan.

    • Liquidity: Consider how easy it is to withdraw money from the plan, especially in case of emergencies.

    • Reputation of the Provider: Research the financial institution or company offering the plan. A reputable provider with a good track record can be a safer bet.

    • Inflation: Consider the impact of inflation on your savings. Will the amount you're saving today be sufficient to cover future costs?

    • Automatic Features: Some plans might offer features like automatic balance increases, which can help your savings keep pace with inflation or rising costs.

    • Consultation: Consider consulting with a financial advisor or planner. They can provide personalized advice based on your financial situation and goals.

So, by carefully considering the above factors and doing thorough research, you can choose a child savings plan that best suits your child's future needs and your financial situation.

People also read: Sukanya Samriddhi Yojana Calculator

Conclusion

Child Savings Plans in India play an important role in securing a child's financial future. Given the rising costs of education, lifestyle, and other significant life events, it's necessary for parents and guardians to start early and choose the right savings plan. Hence, with proper planning and disciplined saving, these plans can provide a financial foundation for a child's future milestones. In short, it's not just about saving, it's about ensuring a brighter, more secure future for your child.

FAQ's on Child Savings Plan in India

  • What is the best money saving plan for children in India?

    The best money saving plan for children in India depends on your individual circumstances and financial goals. However, some popular options include:
    • Sukanya Samriddhi Yojana (SSY)

    • Public Provident Fund (PPF)

    • Child ULIPs

    • Systematic Investment Plans (SIPs)

  • Which plan is best for the child's future?

    The best plan for your child's future will depend on their individual needs and goals. However, some of the best plans are: 
    • TATA AIA Fortune Pro- WOP

    • Max Life Online Savings Plan- Child Plan

    • Bajaj Allianz Smart Wealth Goal- Child Wealth

    • ICICI Pru Smart Kid Plan

  • Are there any tax benefits associated with Child Savings Plans in India?

    Yes, many Child Savings Plans, like the Sukanya Samriddhi Yojana and PPF, offer tax benefits either on the invested amount, the returns, or both.
  • Why should I consider a Child Savings Plan for my child?

    A Child Savings Plan ensures that you have a dedicated financial corpus ready for your child's major life milestones. Given the rising costs of education and other expenses, having a savings plan can provide financial security.
  • What is the right time to choose a child savings plan?

    Start investing early for a kids savings plan. It helps you to invest over a long period, enabling you with correct financial decisions.
  • What is the expected tenure period for a plan to receive its maximum value?

    The right thing is to invest over a long time, preferably 10+ years. It will help you derive maximum value when you have to withdraw the amount for a specific purpose.
  • What should I do if I want to withdraw money before the maturity period?

    You can opt for a plan that allows partial withdrawal. It ensures you can withdraw a sum for any necessity before the term of the maturity period.
  • How do I select the best plan for my child?

    The choice of a plan depends on the financial need for which you invest. Select a plan from the various options after recognizing the best policy that suits your child's needs.
  • What are the various investment types for a child savings scheme?

    The investment types you can choose from include Systematic Investment Planning (SIP), Public Provident Fund (PPF) & Debt Fund.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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