Looking to Invest in a Child Savings Plan? Read This First
Public Provident Fund
Sukanya Samriddhi Yojana
Postal Life Insurance Plan
Every parent strives to provide their children with the best possible resources to help them make a successful future. The stark rise in the cost of education makes it vital to invest in your child’s future at the earliest. You need to compare and analyze all the child investment plans available and select the most suitable option for your family’s future needs.
Many parents go through confusion while looking for right child investment plans. Here are a few options that will help to fulfill your child’s long-term goals:
PPF is a reliable and safest plan for child investment for a long time now. You can open a PPF account in your name as well as in the minor’s name. It has a long tenure of 15 years. Therefore, if you open a PPF account at an early stage of your child’s life, the PPF account would have matured by the time he/she becomes an adult.
However, you cannot exceed Rs. 1.5 lakhs to put into a single PPF account in a financial year. It is also the maximum limit to avail the Sec 80C tax benefit. Also, when the child becomes a major, he/she can extend the PPF account in a block of 5 years indefinitely, invest to save tax, and reap tax-free proceeds.
ULIP schemes are ideal for low-risk investors. ULIP Child Saving Plans from reputable insurance companies such as Max Life Insurance provide a dual benefit of investment and life insurance. Multiple investment options help you make your kid’s education secure, and the life cover protects your family against unprecedented events.
As there is inflation in every field, especially education, this plan also helps you create a corpus over a while so that you can cater to the future expenses of your child. ULIP is one such child investment plan that offers lower charges on investment, online and gives you the freedom to choose policy terms, premium payable terms, and sum assured multiples.
It provides you with the benefit of market-linked growth without actually participating in the stock market. Moreover, the premium payable is exempt from taxes under Sec 80C.
The government-backed scheme targets the girl child and her financial needs for education and marriage. You can open this account only in the name of the girl child who is below ten years. Irrespective of the age, the SSY account runs for 21 years from the opening date. You can also avail premature closure for her marriage by confirming that she is not under 18. After the girl crosses 18, you can make withdrawals for higher education from a maximum of 50% of the account balance.
Postal Life Insurance is another type of life insurance that covers people working in the public sector. It offers the lowest premium in the insurance market and provides some of the highest bonuses. Postal life insurance also provides a facility to the policyholder to convert their whole life insurance into an endowment plan. The sum assured ranges from Rs.20,000 to Rs. 50 lakhs.
The Postal Life Insurance Child Plan provides coverage to a maximum of two children of a family. The maximum sum assured is Rs.3 lakhs, and you do not have to pay any premium in the event of the demise of the insured. The children will receive the sum assured at the end of the policy term along with accrued bonuses.
Once you have estimated the monthly expenses of your child as well as the long term goals, it becomes simpler to select from the child investment plans.
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