Child Insurance or Investment and Everything You Need To Know

Raising a child with the right values so that they turn into responsible individuals when they grow up is every parent’s task as soon as their child is born. On top of that, planning for their future is a whole different ball game. It is always advised that parents should jot down a plan that secures their child’s future financially when they grow up.

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Investing in your child's future:A wise decision & a loving choice
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  • Insurer pays premium in case of loss of life of parent

  • Create wealth for child’s aspirations

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  • 12+ plans available

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6.7 Crore
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Here you will get a piece of better information about child plans, it’s benefits, how child investment and child insurance exactly work, and different child plans in India available.

What is a child plan?

A child plan is a financial plan that parents buy to secure their child’s future even when they are there or no more there to look after their child’s needs. Different plans work differently according to the need of the parents for their children.

Broadly, there are 2 types of child plans available in India:

  1. Child Insurance Plan

    A child insurance plan is an investment plus insurance plan offered by many companies for the safety of your child’s future dreams and goals. Child insurance plans provide a safety cushion to corpus your child’s needs in case of your untimely demise. When you are no more there to look around for your child, the child insurance plan invests money on your behalf and pays the amount promised for your child’s needs and requirements.

    With a mix of insurance and investment products, the child insurance plan pays the lump-sum amount of the life cover at the end of the policy term. They are also generally customizable with options to add riders that enhance the Child Insurance plans.

    Here are some Child Insurance Plans that are widely popular:

    • Child Endowment Plan

    • Child Moneyback Plan

    • Child Education Plan (ULIP)

    Benefits of Child Insurance Plans:

    • Provides financial security

    • Offers a blend of both insurance and investment

    • Secures child future even after the demise of the parent

    • Favors long term savings plan

    • Option to add multiple riders

  2. Child Investment Plan

    Every parent wishes the best for their children from the start and invests for their future needs from the very beginning. For higher education and financial security of a child, Child Investment Plan plays a vital role. The rise of education costs and increasing future needs day-by-day makes it necessary for every parent to invest in Child Investment Plan.

    Here are some Child Investment Plans that parents should look out for if they are planning to buy a plan for their child.

    • Sukanya Samriddhi Yojana

    • Equity Mutual Funds

    • Recurring Deposits (RD)

    • Public Provident Fund (PPF)

    • Systematic Investment Planning (SIP)

    Benefits of Child Investment Plan:

    • Regular savings

    • Security of child’s future

    • Higher Education cover

    • Health cover

    We have seen the different plans and their benefits offered under Child Insurance Plan and Child Investment Plan. For more clarity on the difference, let us pick one plan from each and compare them to understand the difference between the two.

    While mutual funds are pure investment products, Unit Link Insurance Plans (ULIPs) serve the dual purpose of Investment and Insurance. Let’s dig in more to make an informed choice:

    Features Unit Link Insurance Plans (ULIPs)
    Investment + Insurance Plan
    Mutual Funds
    Investment Plans
    Working Part of the premium is allocated to life cover. Rest is invested Almost the entire amount is invested. Focuses on the growth of capital invested only
    Key Benefit Life cover + investments and other benefits Long-term wealth creation
    Tax Benefits Premium paid is deductible under Section 80C No tax deductions as such
    Investment Charges Fund management charges are deducted from the invested amount. Usually higher than mutual funds Fund management charges are deducted

    This will give some clarity between pure investment plans and investment + insurance plans.

In a Nutshell

As a parent, it is very important to ensure that your child’s future needs are met and can live a life you always thought they would. Investing in the right child plan as per your needs and financial capacity would be a wise step every parent should take. Investing in Child Investment Plan to create a financial cushion and to make better money or buying a Child Insurance Plan to provide financial protection for your child is your call. Make the best choice for a bright future!

*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:-
^^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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