Sukanya Samriddhi Yojana vs SBI Smart Champ

What is the Sukanya Samriddhi Yojana?

The Sukanya Samriddhi Yojana is a government-backed scheme that allows parents to invest a principal amount of money in a SSY account for 15 years. The account automatically matures when the girl child turns 21. The scheme encourages parents to initiate long-term investments for higher education of their girl child. 

Key Features of SSY

• The current rate of interest is 8.2% compounded yearly and reviewed quarterly by the government. 
• The amount that can be deposited annually in an SSY account ranges between ₹250-₹1.5lakh
• A single account can be opened per child and two accounts can be opened per family. 
• The EEE status facilitates tax deductions under Section 80C, tax-free interest and tax-free maturity amount. 
• Once the child passes class 10th or reaches 18 years of age, 50% of the balance can be withdrawn for educational purposes. 

SBI Smart Champ 

The SBI smart champ is a participating child plan which is designed to support a child’s higher education through structured payouts and insurance protection even in the absence of the parent. This insurance allows the parent to choose a cover ranging from ₹1lakh to ₹1crore. 

Investment

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₹10,000/Month

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Key Features of SBI Smart Champ

• The plan functions as a savings plan where you pay premiums till your child reaches 18 years of age. 
• The maturity period is the difference between 21 and the age of your child at the time of opening the account.
• The plan provides the policyholder with triple protection in case the policyholder passes away or suffers an accidental total or partial disability. In such cases the family is provided with immediate payment to the family to help with current fiscal needs. It also provides a waiver of premiums along with ensuring that the benefits continue to be provided to the child. 
• Premiums paid are also eligible for tax deductions under Section 80C along with the payouts being tax free.

Protection Benefits Under SSY and SBI Smart Champ

Both SSY and SBI Smart Champ provide protection in different regards to their financial consumers. While SSY provides tax-based and capital protection due to its government-backed nature, SBI smart champ focuses on ensuring a child’s education regardless of their parents' presence.

1. SSY

   • An SSY is government-backed, which means that the invested capital is protected from market volatility
   • An SSY also enjoys an EEE status which qualifies it for tax deductions, tax-free maturity and tax-free interest. 
   • An SSY provides grounds for premature closing of an account in case of the death of the parent or life-threatening disease so that the family can easily access the funds before reaching maturity.

2. SBI Smart Champ

   • Immediate Financial Payout: In case of the death or accidental disability of the parents, an immediate payment is issued to the family as a lump sum, which is the 105% of the total premium paid up to that date.
   • Waiver of Premiums: The insurance also provides a waiver of premiums, wherein all future premiums are taken over by the insurance company.
   • Continuation of plan benefits: The plan does not terminate. It keeps on accumulating annual bonuses as if the parent were paying premiums. 
   • Inbuilt disability benefits: The policy specifically defines ATPD, where the parent is no longer able to pay premiums due to an accidental disability. In such cases, the insurance benefits are activated as soon as the disability is proven.

Key Points of Difference Between SSY and SBI Smart Champ

What Should You Choose?

Your choice between SSY and SBI Smart Champ depends on various factors such as your financial goals, educational plans for your child and your requirement of the hour. 

• Choose SSY if you value the safety of your capital and want guaranteed returns on your investments. Additionally, if you wish to reap tax benefits and can sustain a long-term investment. 
• Choose SBI Smart Champ if you want insurance protection and premium waiver benefits. 

Parents generally try to invest in both SSY and Smart Champ in order to not only build a healthy corpus but also provide their child with financial security and protection in case of any mishap. 

Conclusion

SSY and SBI Smart Champ are two different routes towards the financial and educational security of your child. You can choose either based on your preference, goals and plans. Additionally, you can explore various other child plans, compare them and choose whichever plan is best for you and your daughter.