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Child Education Plans in India

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Every parent aspires to provide the best for their child's future. Financial planning plays a crucial role in achieving that goal. In India, child plans have emerged as remarkable instruments to secure a child's future in a holistic manner. Going beyond mere savings and investments, these plans offer a comprehensive approach tailored specifically to children's needs.

Child plans in India provide a unique combination of financial protection and growth potential, ensuring that parents can safeguard their child's dreams and aspirations. These plans offer flexibility in terms of premium payments, investment options, and policy tenures, all while allowing parents to align them with their specific financial circumstances and goals. On top of that, child plans often include additional features such as maturity benefits, education support, and waiver of premium in case of the parent's unfortunate demise.

In this article, we will explore the diverse range of child plans available in India and uncover their key features, benefits, and points of consideration for parents. We will also delve into the importance of starting early and understanding the different types of child plans to make informed decisions for securing a bright and prosperous future for your beloved children.

Why Buy a Child Plan?

With a rise in education costs, especially tuition fees, it has become pretty important to buy a child education plan for your young ones so that they can fulfil their dreams without expenses being a hurdle. Here are some major reasons to invest in your child’s future goals with this type of plan -

  • A child education plan provides financial protection to your child in the most important years of your child’s life.
  • It safeguards their future even if a parent who has been paying the premium passes away untimely.
  • It combines investments and savings under one plan. 
  • This type of plan enables the development of discipline and long-term savings which can be challenging otherwise.

Main Features and Benefits of a Child Education Plan India

The following are the key features of child education plans in India -

  • life insurance Cover - Child education plans in India have an integrated life insurance policy, with the sum assured usually being up to 10 times the yearly premium paid. The life cover limit is in accord with the guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI). 
  • Investment Options Available - As a parent, you have the flexibility to choose from Child Endowment Plans and Child ULIP plans. Under a child endowment plan, the policyholder does not have the authority to select an asset class to invest in. Insurance providers typically opt to make investments in government bonds, treasury bills, corporate bonds, and more with these plans. Under a child ulip plan, on the other hand, a policyholder can choose the asset class under which their funds will be invested. Some of the common investments with respect to such plans include equity funds, debt funds, and hybrid funds. 
  • Lock-in Period - Both types of child education plans in India have a lock-in period of 5 years. From the 6th year, the policyholder can withdraw partially. They also have the flexibility to decide whether they want to surrender the policy and withdraw the investments after the 5 years of lock-in period ends.
  • Charges - The child education plans of India have certain charges including management charges, policy administration charges, premium allocation fees, and more. 

Here are some benefits of investing in child plans in India -

  • Secures the Child’s Ambitions - By opting for a child education policy in India, you have the opportunity to accumulate a substantial sum of money that can be utilised by your child to pursue their passions. Whether they aspire to study abroad or embark on an entrepreneurial journey, this fund can provide them with the financial means to fulfil their desires. A reliable child plan ensures the realisation of your child's dreams by offering robust financial security.
  • Ensures Financial Stability - These plans offer a significant advantage - providing the child with financial stability in case the parent passes away untimely. While nothing can truly compensate for the loss of a parent, the plan's payout ensures that a child can pursue their education and aspirations and remain financially secure. It grants them the opportunity to forge ahead, even in challenging times, with the means to fulfil their dreams.
  • Maturity Benefit - By acquiring a child education plan in India at an early age, your child is poised to reap the maturity benefits when they embark on their college journey. This becomes particularly crucial in the light of ever-increasing education expenses. Opting for a child plan enables you to safeguard your child's college expenses and ensure financial security and peace of mind.
  • Additional Riders Available - Several child plans in India provide add-on benefits such as premium waivers and personal accident insurance riders. These additional features provide an extra layer of coverage and surpass what a basic child education policy offers. By opting for these riders, you, as a parent, can enjoy peace of mind and provide your little ones with added support and security.
  • Partial Withdrawals - Several child plans offer the flexibility to make partial withdrawals from the accumulated corpus after the lock-in period ends, providing an income source during financial emergencies. These withdrawals can be utilised to support your child's pursuit of a specific course or any other financial obligations. The option to access funds from the plan ensures that you can effectively handle unexpected expenses or invest in your child's educational aspirations.

Types of Child Education Policies in India

Most insurance providers in the country provide child plans to secure your little one’s future. Moreover, there are different types of child plans in India that can be customised as per your needs and priorities.

Discussed below are the major types of child education plans in India -

  • Child ULIP Plan - This sort of child education plan in India provides a lump sum payout upon completion of the policy term. Although the maturity proceeds can be utilised for various purposes, the primary objective is to secure funds for the child's higher education expenses. Child ULIPs operate similarly to other Unit Linked Insurance Plans (ULIPs) by investing in Equity and Debt securities. The key difference lies in the tenure provided. Unlike standard ULIPs, with policy terms spanning 10 to 25 years, a child ULIP plan pays out when the child reaches 18 years of age. This ensures timely financial support for the child's educational journey.
  • Child Endowment Plan - This kind of child plan in India offers a combination of life insurance coverage and assured returns. These plans usually involve four payouts (each equivalent to 25% of the sum assured along with applicable bonuses) commencing when the child attains 18 years of age. With guaranteed returns, this type of Child Policy entails a lower level of risk. Nonetheless, the returns provided by such schemes are typically comparatively modest.

The Best Child Education Plans in India

Tabled below are some of the best child plans in India -

Plan Name Entry Age of Parent Maximum Maturity Age of Parent Minimum Sum Assured
AEGON Life Rising Star Insurance Plan 18 to 48 years 65 years 10x the regularly paid yearly premium
Bajaj Allianz Young Assure  18 to 50 years 60 years 10 x the yearly premium
Birla Sun Life Insurance Vision Star Plus 18 to 55 years 75 years INR 1,00,00
HDFC SL YoungStar Super Premium 18 to 65 years 75 years 10 x the yearly premium
IndiaFirst Happy India Plan 18 to 50 years 60 years 10x or 7x of the yearly premium (whichever is higher)
ICICI Pru SmartKid Solution 20 to 54 years 64 years INR 45,000
Max Life Shiksha Plus Super 21 to 50 years 65 years INR 2,50,000
Pramerica Life Idols Gold Plan 18 to 50 years 65 years INR 1,50,000
SBI Life - Smart Scholar 18 to 57 years 65 years 20 or 7 times the annual premium paid (in case of regular premium payment) or 1.25 times in case of single premium payment
Bharti AXA Life Child Advantage Plan 18 to 55 years 76 years INR 25,000
Aviva Young Scholar Secure 21 to 50 years 71 years 10 times the annual premium paid
Edelweiss Tokio Life EduSave 18 to 45 years 60 years INR 2,25,000
PNB MetLife College Plan 20 to 45 years 69 years INR 2,12,040
Reliance Life Child Plan 20 to 60 years 70 years Equal to the Policy
TATA AIA Life Insurance Super Achiever 25 to 50 years 70 years 10 times the yearly premium paid
Wealthsurance Future Star Insurance Plan 18 to 54 years 64 years 10 times or 7 times the yearly premium paid (whichever is higher)
SBI Life - Smart Champ Insurance 18 to 57 years 65 years 20 times or 7 times the annual premium paid (whichever is higher)
Shriram Life New Shri Vidya 18 to 50 years 70 years INR 1,00,000
SUD Life Aashirvad 18 to 50 years 70 years INR 4,00,000
Smart Future Income Plan 18 to 55 years 80 years 100 x chosen monthly income

Documents Required to Apply for Child Education Plan in India

Listed below are the types of documents required to apply for a child education plan in India -

  • Proof of Age
  • Identity Proof
  • Address Proof
  • Income Proof
  • A duly filled-in proposal form

How Does the Best Child Education Plan Work?

Child plans in India are designed with the objective of helping your child realise their dreams. To initiate the process, you need to make a decision between purchasing a Unit-Linked Insurance Plan (ULIP) or an Endowment Plan.

With a ULIP, you have the freedom to choose where your money gets invested. On the other hand, an endowment plan involves the insurance provider investing the amount in debt instruments.

When purchasing the policy, you must clearly specify whether you prefer a lump sum payment or regular monthly or annual payments. Once you finalise the details and pay the premium, the child plan becomes active.

Consider a scenario where a policyholder meets with a fatal accident. In such an unfortunate event, all future premiums will be waived off and the provider will annually pay the policyholder’s child a portion of the maturity amount until the plan matures. Upon maturity, the child will also receive the promised lump sum amount.

Things to Keep in Mind When Purchasing a Child Education Plan in India

Here are some conditions to consider when buying the best child plan in India -

Sufficient Life Insurance Coverage

To secure the future of one’s child, it is crucial to obtain an appropriate level of life insurance coverage. This way, one can ensure the well-being of their children even if they are no longer present. 

It is advisable to engage the expertise of a financial advisor and planner soon after determining the suitable insurance type. Based on their guidance, you can get a child plan that aligns with your specific needs and circumstances.

By being proactive in your approach, you can provide your child with a stable and secure foundation regardless of any unforeseen circumstances.

Policy Tenure

Make sure that the duration of the child education plan in India aligns with your specific requirements. Opting for an insufficient timeframe may undermine the purpose of term insurance, while an excessively long period will result in higher-than-needed premiums. For this reason, it is crucial to strike a balance and choose a policy duration that optimally meets your needs and financial consideration.

Make Separate Arrangements for Each Child

It is essential to make separate provisions for each child to ensure that their specific requirements are met. This approach prevents the scenario where you excessively withdraw funds from your shared savings for the older child, which could jeopardise the financial security of your younger child if the savings fall short.

By creating distinct provisions, you can better safeguard the future well-being of each child and avoid potential risks that may arise from an unequal distribution of resources.

Consider Plans with Premium Waiver Rider

A significant number of individuals get an insurance policy for their children's future without verifying the inclusion of a crucial add-on.

The premium waiver add-on ensures the continuity of the policy even if the parent passes away so that their child receives the funds when they require them the most. It is essential to thoroughly check for this provision before purchasing an insurance policy to safeguard your child's financial well-being.

Go for the Partial Withdrawals Option

Unforeseen circumstances can arise at any moment and necessitate the availability of financial support for a child's immediate cash needs.

The inclusion of partial withdrawals in the top child education plans enables the withdrawal of partial amounts to address unexpected expenses. This provision safeguards against emergencies causing financial instability for the family or hindering the child's education and aspirations.

By utilising partial withdrawals, the original financial planning remains undisturbed, eliminating the need to rely solely on a regular income to fulfil these requirements. Thus, this feature ensures a stable financial situation and safeguards the child's educational journey and dreams.

To know more about the best child plans in India, go through the following FAQ section. 

FAQ's

Q1. Can you purchase a child plan for a 10-year old child?

Ans: It is indeed possible to acquire a child plan for a 10-year-old to make sure that funds are available for their future needs and expenses when the policy matures. Moreover, in case of any mishap, the child would receive the full sum assured. Nonetheless, initiating the plan at an earlier stage can prove advantageous for the child. Financial experts strongly recommend investing in a child plan right from birth to maximise the potential benefits and secure a prosperous future for the child.

Q2. When can you withdraw money from a child education plan in India?

Ans: After a minimum of 5 years from the policy's commencement and prior to its maturity, individuals have the flexibility to make a complete withdrawal of the total sum. Some child plans also offer the option of partial withdrawals that can be utilised for addressing your child's financial requirements and ensuring liquidity whenever necessary.

Q3. How much does it cost to insure your child?

Ans: The premium amount will be determined by various factors including the policy term, age of the insured, sum assured, and other relevant considerations.

Q4. When should you buy a child education plan in India?

Ans: For parents with children aged from 0 to 15 years, it is crucial to invest in a child plan. Additionally, individuals seeking to establish a financial corpus to secure their child's education expenses and combat inflation through systematic investments should consider choosing a child insurance plan.

Q5. Why should you buy a child plan in India?

Ans: When it comes to securing your child's future, child insurance plans offer the freedom to invest according to your child's educational requirements, your present financial situation, and other financial objectives.

These plans generally provide a life cover that is approximately 10 times the annual premium. Additionally, they allow partial withdrawals when necessary and allow individuals to benefit from tax advantages on the premiums paid.

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