Everything You Need To Know About Child Saving Plans In India

Children these days are smart, and they learn very quickly. If you download a new application on your phone, it will take your time to get familiar with its features, but for your children, it is just a piece of cake. Studies have shown that young children are smarter than adults as they have quick learning ability, they are good at observation and imagination, and above all, they are creative.

Your children are smart, don’t you want to be smart?

With the rise in the cost of education these days, many parents are unable to provide the type of education their child wants. If this is the situation today, then you can only think what the scenario in the future with high inflation will be. Child’s plans come to the rescue as it is designed to meet your child’s future needs financially.

Below you will find everything that you should know about child savings plan:

Why are Saving Plans for Child Important?

From the day your child was born to the day he/she will settle down with their family; you want to take care of everything related to them, and you want best for your ward. Child plans will look after your child’s education or marriage expenses in the years to come. All you need to do is to invest a part of your income in a child plan so that your child will get what they want without any hassles. Here is why the child saving plan is important for fulfilling the future financial needs of your ward:

• Security

It secures your child’s future and provides you with financial stability

• Flexibility

Child saving plan is flexible so you can switch your money for unlimited times

• Tax benefits

Under Section 80C, you get tax deductions for the premium paid and under Section 10 (10) D, any income from the plan is tax-free.

• Multiple needs fulfilled

All future needs of your child are looked after from his/her education to marriage

• Additional riders

You can buy riders like critical illness benefit, accidental death benefit, and income benefit

Advantages of Saving Plans for Child

• Maturity benefit

The sum assured amount equal to the fund value will be paid to parent or guardian at the time maturity, where fund value is:

Fund Value = Summation of Number of Units in Funds X respective NAV of the Funds as on the date of maturity.

• Tax benefits

Under Section 80C, tax benefit on the premiums paid are exempt. Under Section 10 (10) D, tax benefits are availed on:

• The payout received on maturity
• The promised life cover amount received at the time of the death of the policyholder.
• Death benefit

On the death of the policyholder anytime during the term of the policy, the plan until the end of the policy term will continue, and the nominee will get the following benefits

• Lump-sum benefit

Immediately after the death of the policyholder, all premium paid till the date of death will be re-paid by the insurance company.

• Family income benefit

The insurance company will  pay 1% of the sum assured from the date of death of the policyholder till the end of the Policy Term

• Funding for premium

Under this benefit, the insurance company will fund all remaining future premiums under the policy.

• Fund value

The fund value will be paid as on the date of maturity.

How Does Child Plan work?

Step 1. Choose your annualised premium

Annualized premium is the total premium that you will have to pay during your policy term. The mode of premium payment can be changed during the premium payment term. The mode of premium payments that you can choose are:

• Annual
• Semi-annual
• Quarterly
• Monthly

Step 2. Choose premium payment term and policy term

The maximum policy term is 30 years, and the minimum policy term is 5 years. You can choose anything between these terms. Also, you have to choose the premium payment term based on your policy term.

E.g.

If you choose a policy term of 20 years, then the premium payment term should also be for 20 years.

Step 3. Choose your investment strategy

You may choose to invest in the following five funds available in child saving plan:

(in decreasing order of potential risk)

• High Growth Fund
• Growth Super Fund
• Growth Fund
• Balanced Fund
• Secure Fund

Documents Required for Child Saving Plan

• Age Proof/Identity Proof

Anyone of the following:

• Birth certificate
• 10th or 12th standard mark sheet
• Driving license
• Passport
• Voter ID
• Address Proof

One that should mention your permanent address:

• Telephone bill
• Electricity bill
• Ration card
• Driving license
• Income Proof

Income certificate of the policy buyer

• Proposal Form 

Provide Your Child With The Best Life 

You want your child to live the life that you dreamt of. So, buy the best saving plan for your child and start saving from today so that when the time comes, your child will get everything they want.

Child saving plans from reputable insurance companies such as Max Life Insurance provide regular payouts in the form of Family Income Benefit and a lump-sum payout payable immediately after the death of the policyholder. Also, after the death of the insured, all outstanding premiums will be funded by the Company.

Buy the best savings plan for your child and sit back and enjoy their success.