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Child Education Plans
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Child education plans are investment vehicles designed to save for your child's future education expenses. They offer a combination of life insurance coverage and investment growth. Child plans allow parents to save for the higher education of their children while providing financial security to the child in case of an untimely demise of the parent. Child education plans help you to save sufficient funds to secure your child's future.
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Written By: Sameep Singh
Sameep Singh Business Unit Head - Domestic Savings
Mr. Sameep Singh is a Business Unit Head for the domestic Investment Business at policybazaar.com, holding a master's from Symbiosis School of Banking & Finance. He has played a pivotal role in crafting investment and term business strategies during his tenure at Policybazaar. His exceptional leadership has been instrumental in driving both product and business growth throughout his impressive career.
Reviewed By: Vivek Jain
Vivek Jain Head of Savings business
Mr. Vivek Jain is the Business Unit Head for Investment Business at Policybazaar.com. A graduate of the prestigious IIM Calcutta he brings over a decade of invaluable experience to his current role. In his capacity as Business Unit Head, he has been a driving force behind the success of Policybazaar's Investment business. Mr. Jain is recognized for his instrumental role in product innovation within the Savings/Investment domain. His leadership and expertise have been pivotal in scaling up the Investment business, underscoring his significant contributions to Policybazaar.com's growth and success.
What Are Child Education Plans?
Child education plans are especially designed to help parents financially secure their child’s future in a disciplined way. In a child education plan, you pay a premium (monthly, half-yearly, yearly, or single-pay) for a specific period. At the end of the policy term, you get a lump-sum amount as the maturity benefit. While you create a corpus for the child's education, the insurance element provides you with life cover.
In case of the unfortunate death of a parent (the policyholder), a child plan will support the nominee with triple benefits. While the life cover amount is paid to the family, the remaining premiums of the plan are paid by the insurer. Also, the child gets the benefit of a monthly payout to meet his/her expenses. That means, even in your absence, the child can use this amount to cover educational costs such as tuition fees, books, uniforms, etc. Besides, child education plans offer flexible payout options at important milestones of your child.
Best Child Plans 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 IPru 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 |
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Invest ₹10K/Month YOU GET ₹1 Crores* For Your Child
Invest ₹8K/Month YOU GET ₹80 Lakhs* For Your Child
Invest ₹5K/Month YOU GET ₹50 Lakhs* For Your Child
Standard T&C Apply *
Why Buy a Child Education Plan?
In case of the policyholder’s untimely death, child plans provide triple benefits for complete protection.
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The life cover is paid to the nominee/family members to meet immediate expenses.
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Future premium amounts of the market-linked child plan are paid by the insurer. Upon maturity, the amount is paid to the child.
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The child gets monthly income to meet the regular expenses*.
*Varies on the basis of different child education plans.
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What are the Key Features of a Child Education Plan?
Here are the key features of child plans:
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Lump-sum Benefit: The plan provides a lump-sum benefit to your children in the unfortunate event of your death within the policy term. This ensures that your child's education fund is not compromised, and they can continue their education without financial constraints.
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Partial Withdrawals: Child education plans offer flexibility in withdrawals too. You can withdraw your money from funds anytime after 5 years. It helps you meet the child's educational milestones, such as admission fees, tuition expenses, or educational trips.
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Waiver of Premium: With a child plan, you can secure your child's future without disrupting premium payments. In the event of your untimely death, the insurance company will take care of the remaining premiums. It ensures that the policy remains active and that your child doesn’t have to compromise his/her educational goals.
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Tax Benefits: As the policyholder, you get tax benefits under sections 80C and 10 (10D) of the Income Tax Act in the child education plan. This means that the premiums paid towards the plan are eligible for tax deductions, reducing your overall tax liability. The tax benefits help maximize the returns on your investment, allowing you to save more for your child's education.
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Life Cover: One of the top reasons to buy child plans is the life cover component. This means that if some unforeseen event happens during the policy term, a predetermined sum assured will be paid to your child. This ensures that the child's education is not disrupted even if you are not around.
What are the Benefits of Investing in a Child Education Plan?
Here are the benefits of investing in a Child Plan:
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Future Security: By investing in a child education plan, you ensure that your child's educational needs are met, even in your absence. This offers peace of mind knowing their future is secure.
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Disciplined Savings: These plans encourage you to save systematically, ensuring you set aside funds for your child's education consistently over the years.
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Financial Protection: In the unfortunate event of your demise, the insurance component kicks in. Your family receives an immediate payout, and future premiums will be waived off, ensuring the policy continues without burdening the child.
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Flexibility: Child plans offer you flexible payout options. This means you can choose to receive funds during crucial educational milestones, like college admission.
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Tax Benefits: Your investments in child education plans can offer tax deductions. This means you can save money while ensuring your child's educational future.
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High Returns: These plans often come with the dual benefit of insurance and investment. By choosing the right plan, you stand a chance to earn higher returns compared to traditional savings.
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Tailored Solutions: You can choose a plan that aligns with your financial capabilities and your child’s future educational needs. Some plans even allow partial withdrawals for emergencies.
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Inflation Shield: As educational costs continue to rise due to inflation, having a child education plan helps you stay prepared. Your child can pursue the best courses without financial constraints.
Tax Benefits on Child Education Plan
| Sections of the Income Tax Act, 1961 | Tax Benefits under Child Education Plan |
| Section 80C |
|
| Section 10(10D) |
|
Types of Child Education Plans
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Child Unit Linked Life Insurance Plans (ULIPs)
As a parent, you undoubtedly want to provide your child with the best education possible, whether it's at esteemed national institutions or prestigious foreign universities. However, relying solely on your savings may not be sufficient to meet the various expenses associated with such education. Market-linked child plans can enable you to create the necessary funds for fulfilling your child's ambitions.
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Capital Guarantee Solutions
If you are looking for a safe and reliable investment option for your child's future, capital guarantee solutions are for you. They provide a guarantee that the initial invested capital will be protected, regardless of market fluctuations or economic uncertainties. This means that no matter how the financial markets perform, the principal amount you invest for your child will be safeguarded.
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Guaranteed Return Plan (Traditional Plan)
Guaranteed return child plans are designed to provide guaranteed returns on investment along with insurance coverage for your child's future. These plans offer you a secure way to accumulate funds for your child's education or other important milestones. Unlike market-linked plans, traditional plans offer a predetermined rate of return throughout the policy term. This means that you can plan your child's future with more certainty, knowing the exact amount you will receive at maturity.
How Does a Child Education Plan Work?
Let’s understand this with the help of an example:
Mr Sharma, a 40-year-old professional, invests in a child plan for his daughter’s higher education. He can choose to pay the premium in lump sum, annually, half-yearly, or monthly. Now, consider the following figures for calculation:
Current age of the child: 10 years
Invested amount (monthly): Rs. 10,000
Invested for 10 Years
Withdraw After 20 Years
Rate of return amount: 19.93%*
In case of outliving the policy term: After the policy matures, the maturity amount that Mr. Sharma will receive is Rs. 1.72 Cr*. The amount can be used for the child’s higher education, considering that the inflation rate is approximately 6%.
And, in case of Mr. Sharma’s death in the 7th policy year, his daughter will still get the life cover**. The child will also get other benefits like a waiver of premiums and a monthly payout depending on the terms of the plan.
*The rate of return is subject to market performance.
**Depending on the plan the nominee will either receive full life cover or partial.
What is Life Cover and its Importance in Child Plans?
Life cover in a child plan is a financial safety net for your child in case of your untimely demise. It provides a lump sum amount to the beneficiary (usually the child), which can be used to meet the child's financial needs, such as education, marriage, and other expenses.
Here is why life cover is important in child plans:
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Financial security for your child: In the unfortunate event of your death, life cover in a child plan will provide your child with a financial cushion to meet their needs. This can help them to achieve their life goals, even if you are not there to support them financially.
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Peace of mind for you: Knowing that your child is financially secure in case of your death can give you peace of mind. This can allow you to focus on other aspects of your life, such as your career and your family.
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Affordability: Life cover in a child plan is relatively affordable, especially when you consider the long-term benefits it provides. You can choose a life cover amount that fits your budget and your child's needs.
Why Buy Child Insurance Plan?
Secure your child’s future even in your absence
in case of unfortunate death of parent
Life Cover paid to family to meet immediate expenses
Future premiums are paid by the Insurance Company. On maturity, amount is paid to the child
Child gets Monthly income to meet the regular expenses
How Much Should You Invest in Child Education Plans?
The amount you should invest in a child education plan depends on your financial goals, income, and the rising cost of education. A good starting point is to aim for at least 20% of the estimated education cost, adjusting for inflation and other factors.
For Example, consider Raj, who plans for his 5-year-old daughter’s college education, estimated to cost ₹20 lakhs in 12 years. Accounting for inflation, this may rise to ₹35 lakhs. Raj uses a child plan calculator and decides to invest ₹10,000 monthly to build the required corpus over time, leveraging compounding growth.
Start early and plan wisely—your investment today can secure your child’s tomorrow.
How to Buy a Child Education Plan From Policybazaar?
By following the steps below, you can make an informed decision and choose the best child education plan for your needs:
Step 1: Visit the ‘Child Plans’ section on Policybazaar’s website
Step 2: Fill in the details on the form, such as Name and Mobile Number
Step 3: Click on ‘View Plans’
Step 4: Enter the required information
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The city you reside in
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Your age, your child’s age
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Your annual income
Step 5: All the child education plans list will be displayed.
Step 6: Customize your plan by choosing the (i) investment amount, (ii) the number of years you want to stay invested, and (iii) the number of years you want to withdraw after.
Step 7: You can easily compare the plans from different insurance companies and choose the one that is suitable for your financial needs.
Step 8: After choosing the best child plan, proceed to Pay
You can choose the best child education plans from Policybazaar and enjoy benefits such as extra payout compared to offline plans. No hidden charges, full transparency, and clear explanations of charges and returns. Expert advice from certified advisors. 100% recorded calls ensure honest selling, with utmost transparency and honesty.
How to Choose the Right Child Education Plan?
If you are not sure which child plans to buy, consider the following key points before making a purchase decision.
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Look for Triple Benefits: A child plan offers triple benefits for comprehensive protection. The triple benefit includes life cover for the parent, waiver of premiums on the death of a parent, and monthly income for the child. This structure makes a child education plan a perfect choice for securing your child's future.
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Check for Partial Withdrawal Options: Child plans offer the option to withdraw up to a limit from the plan during the policy term. This benefit helps you to be prepared financially for the different life stages of your child.
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The Reputation of the Insurance Provider: Seek out financially stable companies with a favorable claim settlement ratio. This ensures their ability to fulfill commitments upon plan maturity or in case of unforeseen events.
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Plan Flexibility: Look for child education plans that offer flexibility in premium payment options, policy terms, and coverage, among other things.
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Diverse Investment Fund Options: Market-linked child education plans offer you the option to select from different funds like debt, equity, and a combination of both according to your risk appetite.
Also, remember that the earlier you start, the more benefits you get. Starting your investment early helps to build a larger corpus, which in turn, gives greater freedom in making any financial decision.
Unique Triple Benefit
- Future premiums paid by insurer on parent's death
- Monthly income to fund child's education on parent's death
- Lumpsum payout to family on parent's death
Returns
- Return as of Apr 2024
- 12%-15%
- 8.2%
- 7.1%
Availability
- Availability
- Girl Child or Boy Child
- Girl child only
- Girl Child or Boy Child
- Max Entry Age
- Upto 18 years
- Upto 10 years
- No Age Limit
Flexibility
- Invested Amount can be Withdrawn after
- 5 years
- 21 years
- 15 years
- Conditions for Premature closure
- Anytime after 5years
- Extreme Compassionate Grounds
- Serious Ailments or for education
- Penalty on Premature Closure
- No Penalty after 5 years
- Returns reduced to Post Office Savings rate
- 1% reduction in interest rate
- Max deposit amount in an year
- No Limit
- 1.5 Lacs
- 1.5 Lacs
Documentation
- Documentation Required for Withdrawal
- Low
- High
- Low
View Plans
What is the Child Education Plan Claim Process?
The claim process for child plans involves the following steps:
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Informing the insurance company: In the event of a claim, you should immediately inform the insurance company about the incident. Contact the insurer's customer service or claims department and provide them with the necessary details. You can also reach out to Policybazaar’s dedicated claims settlement team for smooth processing.
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Documentation: You will have to provide a few documents to process the claim, including:
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Claim form: You need to fill out a claim form with accurate and complete information.
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Policy document: Provide a copy of the child insurance policy.
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Medical records: If the claim is related to medical expenses, you may need to submit medical reports, bills, prescriptions, and any other relevant documents.
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Proof of identity: Submit a valid proof of identity, such as an Aadhaar card, PAN card, or passport.
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Incident-related documents: If the claim is due to an accident or loss, you might need to provide relevant documents, such as a police report, FIR (First Information Report), or any other supporting evidence.
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Submitting the documents: Gather all the required documents and submit them to the insurance company within the specified timeframe. It is advisable to keep copies of all documents for your records.
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Verification and assessment: The insurance company will review the submitted child plan documents and assess the claim. They may conduct their own investigations or request additional information if needed.
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Claim settlement: Once the claim is verified and approved, the insurance company will process the settlement. The settlement amount will depend on the terms and conditions of the child plan. The insurer will pay the policyholder or the nominee, as applicable.
What are the Advantages of Early Planning for Your Child's Education?
There are many advantages to early planning for your child's education. Here are a few:
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More Savings: Starting early allows your money to grow over time with compound interest.
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Less Stress: Gradual savings help manage rising education costs without a financial burden.
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Better Choices: Early planning gives you time to explore and select the best educational options.
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Teach Responsibility: Saving early sets an example of financial planning for your child.
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Secure Success: Ensures your child has the resources for a quality education and bright future.
Conclusion
Child Plans are a smart way for parents to save for their kids' future education. By starting early, you can make sure your child has the funds they need, even if life throws unexpected challenges your way. With these plans, you're not just saving money; you're giving your child the gift of education without financial worries. In short, it's a way to make sure your child's dreams have the support they need to come true.
What Are Child Education Plans?
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved
insurance plan.
# The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
^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.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
#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.
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Insurers Offering Child Plans
Tata AIA
Aditya Birla Sun Life
Bajaj Allianz
Max Life
HDFC Life
ICICI Prudential
Bharti AXA Life
Edelweiss Life
Kotak Life
Future Generali
PNB MetLife
SBI Life
Aviva
Bandhan Life
Canara HSBC
IDBI Federal
IndiaFirst
Pramerica Life
Reliance Life
Sahara Life
Shriram Life
Star Union
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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