Parents looking to secure their children's financial future need to consider more than just building a sizeable savings corpus. They must also account for expenses that arise at different stages, particularly college education, postgraduate courses and marriage. This makes a combination of long-term investments, insurance protection and readily available funds an important part of financial planning.
Government-backed schemes, including the Sukanya Samriddhi Yojana (SSY) and Public Provident Fund (PPF), provide tax-free returns. The Life Insurance Corporation of India (LIC), on the other hand, has a range of participating child insurance plans designed to meet such needs.
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Unlike conventional savings products, these policies are structured to provide periodic payments during key education years, along with life cover and a final maturity benefit.
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LIC's New Children's Money Back Plan
It is a participating non-linked plan specifically structured to meet the educational, marriage, and other financial needs of growing children through milestone-based payouts.
Entry Age: 0 to 12 years.
Policy Term: 25 minus child's age at entry.
Premium Paying Term (PPT): 18 minus child's age at entry (premiums cease when the child turns 18).
Survival Benefits (Money Back):
Age 18: 20% of Basic Sum Assured (BSA).
Age 20: 20% of Basic Sum Assured (BSA).
Age 22: 20% of Basic Sum Assured (BSA).
Maturity Benefit (Age 25): 40% of BSA + Vested Simple Reversionary Bonuses + Final Additional Bonus (FAB).
Entry Age: 30 days to 12 years.
Policy Term: 25 minus the child's age at entry.
Premium Paying Term: 20 minus the child's age at entry.
Flexible Payout Options (Ages 20 to 24):
Option 1: No annual survival benefit; 100% BSA paid at maturity (Age 25).
Option 2: 5% of BSA per year for 5 years + 75% BSA at maturity.
Option 3: 10% of BSA per year for 5 years + 50% BSA at maturity.
Option 4: 15% of BSA per year for 5 years (Ages 20–24) + 25% BSA at maturity.
LIC's Amritbaal
It is a non-participating guaranteed endowment plan designed for parents seeking predictable growth without relying on fluctuating annual bonuses. It offers a guaranteed addition of Rs 80 per Rs 1,000 Basic Sum Assured per year throughout the policy term.
Entry Age of Child: 30 days to 13 years old.
Maturity Age: 18 to 25 years old.
Policy Term: 5 to 25 years.
Minimum Basic Sum Assured: Rs 2,00,000
Payout Illustration: Investing Rs 5,000 per Month
Below is a practical breakdown for a parent enrolling a newborn (Age 0) with an investment of Rs 5,000 per month (Rs 60,000 annually) under LIC Jeevan Tarun.
Investment Summary:
Monthly Premium: Rs 5,000
Annual Premium: Rs 60,000 (approx., excluding taxes)
Premium Paying Duration: 18 Years (Age 0 to Age 18)
Total Premium Outflow: Rs 10.80 lakh (Rs 60,000 x 18)
Basic Sum Assured (BSA): Approx. Rs 12.00 lakh
Total Estimated Payout to Child:
Annual College Expenses (Ages 20–24): Rs 9 lakh
Maturity Lump Sum (Age 25): Approx. Rs 22 lakh – Rs 26 lakh
Overall Benefit Realised: Rs 31 lakh to Rs 35 lakh (on a total investment of Rs 10.80 lakh)
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Parents can potentially claim deductions on eligible premiums under Section 80C, with the annual limit capped at Rs 1.5 lakh. In addition, survival payouts and maturity proceeds may qualify for tax exemption under Section 10(10D), depending on the applicable conditions and tax rules.
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LIC Jeevan Tarun
This is a highly flexible child plan designed to align directly with a child's higher education phase (ages 20 to 24).
