Mutual Fund Child Plan

Mutual fund child plan is a financial product that offers a combination of long-term growth potential and financial security, ensuring that your child’s education expenses, career aspirations, marriage and other important milestones are well-supported. Let us read about the best mutual fund child investment plans in 2023 that helps you pave the way for your child’s bright future:

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

  • Create wealth for child’s aspirations

  • Tax Free maturity amount+

  • 12+ plans available

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  • Insurer pays premium in case of loss of life of parent

  • Create wealth for child’s aspirations

  • Tax Free maturity amount+

  • 12+ plans available

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We are rated~
rating
6.7 Crore
Registered Consumers
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Insurance Partners
3.4 Crore
Policies Sold

What is Mutual Fund Child Plan?

A mutual fund child plan is an investment option that helps you to create a financial net to secure your child's future financial needs. These plans are structured to provide a disciplined and goal-oriented approach to investing fir your child’s higher education, career, marriage, or other important life milestones. There are two main types of mutual fund child plans: 

  • Unit Linked Insurance Plans (ULIP)

  • Child Plans

These child investment plans invest in a variety of mutual fund assets, such as:

  • Equities

  • Bonds

  • Hybrid Funds

The goal of these plans is to grow the money over time so that it can be used for the child's education, coaching, tour, marriage, or other expenses.

Best Mutual Fund Plans for Child in 2023

The best mutual fund today offered by various insurance companies for an individual with the following conditions are listed in the table below:

  • Your Entry Age: 30 years

  • Investment Amount: Rs. 10,000 per month

  • Premium Payment Term: 10 years

  • Policy Term: 20 years

Investment Plans Entry Age Maturity Age Policy Term  (PT) Minimum Premium Amount (Annual)
TATA AIA Fortune Pro-WOP 18 - 60 years 65 years 15 - 40 years Rs. 12,000
Bajaj Allianz Smart Wealth Goal-Child Wealth 18 - 55 years 33 - 85 years 15 - 30 years Rs. 48,000
Max Life Online Savings Plan- Child Plan 18 - 54 years 64 years 5 - 30 years Rs. 12,000
Edelweiss Tokio Wealth Secure Plus- Child 0 - 50 years 18 - 70 years 5 - 25 years Rs. 24,000
ICICI Pru Smart Kid Plan 20 - 54 years 30 - 64 years 10 - 25 years Rs. 45,000
HDFC Life Sampoorn Nivesh- Classic Waiver Benefit 30 days - 65 years 18 - 85 years 85 years - Entry Age Rs. 12,000
HDFC Life Click 2 Wealth - Child 30 days - 60 years 18 - 75 years 10 - 40 years Rs. 12,000
LIC SIIP Plan 90 days - 65 years 18 - 85 years 10 - 25 years Rs. 40,000
Aditya Birla Capital Wealth Aspire Plan 18 - 65 years 18 - 75 years 10 - 40 years Rs. 40,000
PNB MetLife Mera Wealth Plan 30 days - 60 years 67 - 80 years 10 - 30 years Rs. 12,000
SBI Life eWealth Insurance 18 - 50 years 60 years 10 - 30 years Rs. 24,000
AVIVA Life i-Growth 18 - 50 years Up to 60 years 10/ 15/ 20 years From Rs. 48,000
Kotak Life E-Invest 3 - 60 years 18 - 75 years 10/ 12/ 15/ 20 years Rs. 24,000
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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
Standard T&C Apply *

What are the Features of Mutual Fund Child Plan?

Child Plan is one of the best mutual fund to invest now to create a large corpus for your child. Some of its key features are listed in the table below:

Features Details
Life Coverage ULIP and Child Plans offer insurance benefits to provide you with a peace of mind in case of your unfortunate demise
High Returns Potential
  • Mutual Fund Child Plans invest in market-linked instruments, such as equities
  • They have the potential to generate higher returns over the long term
Goal-oriented Investment
  • These child investment plans are specifically designed to meet the financial goals of children
  • These plans provide a disciplined approach to investing
  • They ensure that funds are allocated towards achieving your life goals
Professional Fund Management
  • Mutual Fund Child Plans are managed by experienced and skilled fund managers
  • These professionals make investment decisions on the behalf of investors
  • These fund managers have expertise in selecting suitable investment opportunities
  • They adjust the portfolio based on market conditions to maximize returns
Diversification
  • Mutual Fund Child Plans invest in a diversified portfolio of securities
  • These include stocks, bonds, and other market instruments
  • This diversification helps spread the investment risk
  • It potentially enhances returns by capturing growth opportunities across different asset classes
Flexibility This best investment plan for child offer flexibility in terms of the following:
  • Investment amount
  • Tenure
  • Premium Payment Mode
  • Maturity Returns Payout Options, and more
Systematic Investment Plans (SIPs)
  • ULIP funds and Child Plan funds often provide the option of investing through SIPs
  • SIPs allow parents to invest a fixed amount regularly at predefined intervals (monthly, quarterly, etc.)
Systematic Withdrawal Plans (SWPs)
  • Some child investment plans, offer Systematic Withdrawal Plans (SWPs) as a withdrawal option
  • This allows you to withdraw a predetermined amount at regular intervals from the accumulated corpus
Tax Benefits
  • As compared to direct mutual fund investment, mutual fund child plans and ULIP plans offer tax benefits u/ Section 80C and Section 10 (10D) of the Income Tax Act, 1961
  • This allows parents to avail tax deductions on the amount invested and interest earned, thus, providing additional savings
  • It ensures a steady cash flow without depleting the entire investment amount at once

People Also Read: SIP Calculator

What are the Benefits of Mutual Fund Child Plan? 

There are many benefits to investing in a mutual fund based child plan. Some of the key benefits include:

  1. Transparency

    Mutual Fund Child Plans provide transparency regarding the portfolio holdings, performance, and charges associated with the plan.

  2. Growth Potential 

    The funds in ULIP plans and Child Investment Plans have the potential to grow your money over time, thanks to the power of compounding.

  3. Rupee Cost Averaging 

    If investing through SIPs, ULIP and child plans benefit from rupee cost averaging. As regular investments are made at different market levels, more units are purchased when prices are low and fewer units when prices are high. This helps in mitigating the impact of market volatility and potentially enhances returns over the long run.

  4. Long-Term Wealth Creation 

    Child Investment Plans and ULIPs typically have a long investment horizon, which allows for potential wealth creation over time. 

  5. Secured Investment 

    Mutual funds are a secure investment option as they are regulated by the Securities and Exchange Board of India (SEBI).

  6. Easy Liquidity 

    While child plans are intended for long-term investing, they still offer liquidity options like Systematic Withdrawal Plan (SWP). Investors can typically make partial withdrawals or redeem units if there is a need for funds in case of need, emergencies or unforeseen expenses.

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Documents Required to Buy a Mutual Fund Child Plan

The documents required to buy a mutual fund child plan are as follows:

Particulars Documents Required
Proof of Child’s Age
  • Birth certificate
  • Passport
  • 10th Board Certificate
ID Proof (Parent/ Guardian)
  • Valid Passport
  • PAN Card
  • Aadhaar Card
  • Driver's License
  • Voter ID Card
KYC documents
  • PAN Card (Parent/ Guardian)
  • Aadhaar Card
  • Passport-size Photograph
Address Proof
  • Utility Bill
  • Bank Statement
  • Aadhaar Card
  • Driver's License
  • Rent Agreement
Proof of Relationship
  • Child's Birth Certificate (showing parent’s name)
  • A Court Order that appoints a Guardian
Bank Account Details
  • Account Number
  • Branch Name
  • IFSC Code
  • Bank Account Statement

How to Buy a Mutual Fund Child Plan?

To buy a mutual fund-based child plan, you can follow these general steps:

Step 1: Determine your financial objectives for the child's future

Step 2: Conduct thorough research on different insurance companies and their fund options in ULIP and child investment plans

Step 3: Choose a child plan from the list of best investment plan for child mentioned above. Select a plan that aligns with your financial goals, risk tolerance, and investment preferences.

Step 4: Complete the KYC process

Step 5: Choose among the lump-sum investment or opt for a Systematic Investment Plan (SIP)

Step 6: Duly fill out the application form and submit it along with essential documents

Step 7: Make the initial premium amount through cheque, demand draft, or online payment

Step 8: Regularly review your investment and make adjustments as needed to stay on track with your financial goals

Mutual Funds vs. Mutual Fund Child Plans

Mutual funds and mutual fund child plans are both investment options for children, but they have some differences in their purpose and features:

Particulars Mutual Fund Child Plans Mutual Funds
Purpose These plans are a specific type of mutual fund plan that is designed to help parents save and invest for their child's future needs They aim to generate returns for investors based on the performance of the underlying investments
Investment Objective These plans have a dual objective:
  • They aim to provide capital appreciation by investing in a diversified portfolio like regular mutual funds
  • It also ensures that the investment matures around the time the child needs funds for specific milestones in their life 
The primary objective of mutual funds is to generate capital appreciation or income for the investors over the long term, depending on the fund's investment strategy
Lock-in Period Many child plans have a lock-in period, that helps ensure that the investment remains intact and grows steadily to meet the child's future needs Mutual funds do not have a lock-in period (except ELSS funds)
Insurance Component child plans include an insurance component, that ensures that the child's future needs are still taken care of even if something happens to the investor They solely focus on investment and do not provide any life insurance coverage

Important Points to Consider Before Investing in Mutual Fund for Child

Here are some important points to consider before investing in a mutual fund child plan and ULIP Plan:

  1. Investment Goal

    The first step is to determine the purpose of investing in a ULIP or child plan. Are you saving for your child's education, marriage, or something else? Once you know your investment goal, you can start to look for mutual funds that align with your goals.

  2. Risk Profile

    Consider how much risk are you comfortable taking with your investment? Mutual funds can be risky, so it is important to choose funds that match your risk tolerance.

  3. Investment Horizon

    Understand your investment horizon. Determine, how long do you plan to invest? As mutual funds are a long-term investment, so it is important to choose funds that have a long track record of performance.

  4. Fund Type

    There are many different types of mutual funds available. Some of the most popular types of mutual funds for children include-

    Fund Type Investment Type Risk- Return Factor
    Equity funds Invests in stocks and equities
    • Potential for high returns
    • Carry a high level of risk
    Debt funds Invests in bonds
    • Lower returns
    • Lower risk
    Hybrid funds Invest in a mix of stocks and bonds
    • Offers a balance of risk and return
  5. Fund Manager

    The fund manager is responsible for making investment decisions for the mutual fund. It is important to choose a fund manager with a good track record of performance.

  6. Fees

    Mutual funds charge fees, which can eat into your returns. It is important to choose funds with low fees.

  7. Exit load

    Some mutual funds have an exit load, which is a fee charged when you sell your shares. It is important to factor in the exit load when you are making your investment decision.

  8. Fund Performance

    Assess the historical performance of the mutual funds included in the child plan. Look for consistent returns over different market cycles and compare them with relevant benchmarks. Keep in mind that past performance does not guarantee future results.

  9. Asset Allocation 

    Examine the asset allocation strategy of the child plan. It should be well diversified across different asset classes like equities, debt instruments, and possibly other asset classes, depending on the plan.

In Conclusion

A mutual fund child plan can be a suitable investment option to secure your child's future financial needs. They offer a number of benefits, including tax benefits, flexibility, potential for high returns, and security. However, before investing, it is crucial to consider carefully factors such as the risk profile, fund performance, asset allocation, costs and fees, investment tenure, tax implications, and the reputation of the fund house. 

FAQ's

  • Which mutual fund is best for child?

    Choosing the best mutual fund for a child depends on various factors such as the investment objective, risk tolerance, investment horizon, and individual preferences.

    Here is a list of the top mutual funds that is best for your child: 

    • SBI Magnum Children s Benefit Fund (G)

    • Axis Children’s Gift Fund

    • TATA Young Citizens Fund

    • ICICI Prudential Child Care Fund Gift Plan

    • HDFC Childrens Gift Fund

  • Can I open a mutual fund child plan for my kid?

    Yes, you can open a mutual fund child plan for your kid. These plans are designed to help parents save for their child's future goals, like education, travel, and marriage.
  • What is child plan in mutual fund?

    A child plan in mutual fund is a type of market-linked plan such as Unit Linked Insurance Plan (ULIP) or Child Education Plan that is specifically designed to help fulfil the life goals of children. The mutual fund child investment plans offer dual benefits of life insurance and investment.
  • Can we invest in SIP for children?

    Yes, you can invest in SIP for children through Unit Linked Insurance Plans (ULIPs), Child Education Plans, or directly in mutual funds. It is an ideal way to invest in small payments every month towards the mutual fund of your child rather than a lump sum payment. 

*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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