The search for a good investment plan for children is something that is widely discussed and deliberated upon on various online and offline forums. With the steep increase in the cost of living, one must make wise investments to safeguard the future of our little ones.
In this article, we bring you six options to consider while planning your investments. Do note that we are merely putting out some of the policies and schemes that exist in the market. You are advised to conduct your due diligence before investing.
1. Sukanya Samriddhi Yojana
• This scheme introduced by the government is targeted towards the girl child and her financial needs such as education and marriage.
• At the time of opening an account, the child must be ten years or below.
• Upon the completion of five years, the first request for a pre-mature closure can be made.
• This scheme carries the highest tax-free return with a sovereign guarantee and comes with the exempt-exempt-exempt (EEE) status. The annual deposit (contributions) also qualifies for Section 80C benefit, with the maturity benefits being non-taxable.
• One needs to visit the post office or the bank to open this account.
Click here for more details.
2. LIC – Child Career Plan
• This policy is a Money Back Endowment Plan for the benefit of a child.
• Upon the untimely death of the parent(s), the Sum Assured plus Bonus is paid to the nominee immediately.
• Under section 80C, Life Insurance premiums paid up to Rs 1,00,000 are allowed as a deduction from the taxable income each year.
Click here for more details.
3. SBI Life – Smart Scholar
• This policy is unit-linked and offers multiple benefits.
• Upon the untimely death of the parent(s), payment of the base sum is assured, along with a waiver of the in-built premium and the continuation of policy.
This plan also provides an accidental death benefit and accidental total and permanent disability benefit.
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• This plan offers nine different fund options, market-linked returns, liquidity through partial withdrawals and loyalty unit additions.
• Tax benefits under Section 80C and 10D are available.
Click here for more details.
4. SBI Life – Smart Champ Insurance Plan
• This policy is a non-linked participating life insurance plan, designed to protect your child’s future educational needs.
• The plan offers assured benefits, which include the accumulation of the bonus at the end of every policy year until the child turns 18.
• Life Insurance premiums paid up to Rs 1, 50,000 are allowed as a deduction from the taxable income each year under section 80C.
• If the policyholder is not satisfied with the terms and conditions of the plan, it can be cancelled within 15 days from the date of receipt of the policy document.
Click here for more details.
5. HDFC SL Youngstar Super Premium
• This policy by HDFC is a unit-linked insurance product with life insurance coverage as well.
• Upon the unfortunate demise of the parent(s), the plan provides the child (nominee) with financial security. This includes the basic sum assured and future premium funding till policy tenure.
It gives you four funds to suit your needs: Income Fund; Balanced Fund; Blue Chip Fund and Opportunities Fund.
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• Investing in this plan also gives you certain income tax benefits.
Click here for more details.
6. ICICI PruSmartKid’s Regular Premium
• This plan is a traditional participating endowment plan for the benefit of the child where the parent’s life is insured.
• Upon the untimely demise of the parent(s) within the policy tenure, the Sum Assured is paid to the nominee to address the immediate financial requirements. The future premiums are waived off and paid by the insurer such that the Maturity Benefit is paid as and when due.
• This policy offers two Maturity Benefit Options:
Option 1: The Maturity Benefit is received at pre-defined critical educational milestones
Option 2: Part of the Sum Assured is paid as Maturity Benefit every year in the last five years of the policy
Under section 80C, Life Insurance premiums paid up to Rs 1,50,000 are allowed as a deduction from the taxable income each year.
Click here for more details.
Do write to us if you know of a good investment scheme apart from the ones mentioned here.
(Edited by Shruti Singhal)
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