Child Plans

A child insurance plan offers both insurance protection and investment opportunities. As a parent, it helps secure your child's dreams and future. The insurance cover provides financial support if something happens to you, ensuring your child's goals are still achievable. Meanwhile, the investment part helps build savings for their future needs like education or marriage. In addition, the option of flexible payouts helps you access funds when needed for important milestones.

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Highlights of Child Plan

Combination of saving and insurance
Helps in building a corpus
Supports children if parents pass away
Secures the child’s future

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Child Plan - Everything you Need to Know

What is a Child Plan

A child plan is an insurance that safeguards and saves money for a child's education goals. In case the insured parent passes away during the policy tenure, the child receives a death benefit. If the parent survives the policy, a maturity benefit is paid.

What Are the Types of Child Plans

Child Endowment Plan

This plan offers stable returns including bonuses over the sum-assured. Profits are small but risk-free, ensuring peace of mind about money safety.

Child Unit Linked Investment Plan (ULIP)

This plan allows the insured to divide the total investment in different products, including equity and debt. It is ideal for long-term plans of 10-15 years and is linked to the market.

Payment Frequency type

Single Premium Child Plan: Pay a single premium for the entire policy term and receive a lump sum amount.

Regular Premium Insurance Plan: Choose to pay premiums annually, quarterly, half-yearly, or monthly as per your comfort.

How Does a Child Plan Work

A child education plan can be structured as an endowment policy, a ULIP, or a money-back policy.


Provides a lump sum amount on maturity along with bonuses.


Returns depend on market conditions. In case of the policyholder’s demise, the child will receive a lump sum along with premium waivers and fund value at maturity.


Gives maturity benefits at the end of the plan, and periodic survival benefits before the end of term. While it is useful for regular lump sums, its returns may not keep up with education cost inflation, leaving you underfunded when needed.

Features and Benefits of Child Plans

Premium waiver

Some companies waive premiums in case of untimely dealth of the child’s parent.

Partial withdrawal

Allowed to withdraw money during emergencies such as medical or educational needs.

Capital for child’s future

Build savings for your child’s higher education.

Tax benefits

These plans offer tax exemptions, benefiting policyholders in the highest tax bracket.

Higher returns

Market-linked child plans often yield over 10-12% returns, surpassing inflation. ULIPs let you pick your investment type.

Income protection

Certain plans provide regular income to children, which is equal to 1% of the sum assured if parents are unable to pay the premium.


Choose from GRP, endowment or ULIP policies.

Tax Benefits of Child Plans

The premiums paid, interest earned and capital received at maturity qualify for tax deductions, as they fall under the EEE exemption.

Tax benefit under Section 80C of the Income Tax Act, 1961

  • Premiums paid for child plans qualify for tax deductions up to ₹ 1.5 Lakhs and tuition fee* deduction up to ₹ 1 Lakh. *

Tax benefit under Section 80DD

  • For parents of children with critical illnesses or special needs, deductions of up to 33% can be claimed for treatment or 40% and 80% can be claimed against expenses related to minor and major disabilities, respectively.

Tax benefit under Section 80E

  • Interest on loans for a child’s higher education is tax-deductible.

Tax benefit under Section 10(10D)

  • All benefits, including maturity and death benefits, are completely tax-free.

Child Plan – Exclusions

What is not covered in a child plan
Substance abuse

No benefits are paid if the insured dies due to alcohol, drugs, or intoxicants.

Self-harm or suicide

No claim amount is given for suicide within one year of policy purchase.

Adventurous or risky sports

Death from risky sports is not covered.

Criminal activities

Death from criminal or illegal act or war are excluded.

How to Get the Best Child Education Plan

Here are a few factors you need to consider before buying the best child education plan:

Age of your child

Buying early helps build a bigger fund for your child over time. Adjust premiums and funds based on your child's age and goals.

Payout needed

Estimate how much you will need for your child’s education or other goals to pick the right plan.

Choice of funds

Choose funds based on risk tolerance for maximum returns.

Premium vis-a-vis ROR

Compare insurers for the best return on investment.

Benefits and features

Compare plan features thoroughly.

Partial withdrawal

Ensure the plan allows partial withdrawals.

Premium waiver

Look for plans with premium waivers.

Economic variables

Consider inflation, education and healthcare expenses before buying.

Who Should Buy a Child Plan

Any parent who wants to protect their child’s future, whether it’s education, marriage, or maintaining their lifestyle, should invest in a child plan. It is essential that you start as early as possible so that you can build enough corpus in the long run.

Let’s study these scenarios for a better understanding of who should buy a child plan.

Examples for more clarity:

Sanjeev wants to save for his child’s education.
34-year-old Married Has an 8-year-old child Annual income - ₹10 lakhs

Sanjeev can opt for low-risk plans as he has more time on his hand and less need for financial support at the moment.

Preeti wants to save for her childrens’ future
40-year-old Married Has two children, 10 and 7 years of age Annual income - ₹18 lakhs

Since Preeti is already 40 and has a reasonable income, she should invest in high-risk, high-performance funds so that in the next 8–10 years, she builds sufficient corpus for education.

Child Plan versus Sukanya Samriddhi Yojana and PPF


Child Savings Plan

Sukanya Samriddhi Yojana Scheme

Public Provident Fund

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



Return as of Apr 2020




Girl child or boy child
Girl child only
Girl child or boy child

Max Entry Age

Up to 18 years
Up to 10 years
No Age Limit


Invested amount can be withdrawn after

5 years
21 years
15 years

Conditions for Premature Closure

Any time after 5 years
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 a year

No Limit
1.5 Lacs
1.5 Lacs


Documentation Required for Withdrawal


How Much to Invest in Child Plans

Good education is essential in India, particularly with the growing wealth gap. It gives your child an edge, helping them secure a good job and reducing the strain on your retirement funds.

Here’s an example to understand how much you may need to invest in the best child plan:  

Cost of Education (Graduation course) in India in 2020 Cost of Education in India in 2040 Investment Amount
15 Lakhs 45 Lakhs 10,000 per month for the next 5 years

Cost Structure of Education

To understand the cost structure of education, we will assume that the inflation rate is equivalent to 10% going ahead.

Documents Needed to Buy a Child Plan


Address proof: Driving license/bank statement or passbook with latest entries/passport/voter ID/Aadhaar card/ration card


Identity proof: Aadhaar card/voter ID/passport/PAN card


Age proof: PAN card/Aadhaar card/passport/voter id card/marriage certificate/ration card/birth certificate/driving license


Passport-size photographs of the individual


Income proof:  

  1. For high sum assured cases, income proof is also needed.
  2. Salary slips of last 3 months/Income Tax Returns/employer certificate/ latest bank statement/latest form 16.

Ask Anything as We Have Answers to Everything in Insurance

The things that make child plan policy special are:

  • It offers a comprehensive gain of both life insurance along with offering maturity benefits to the child.
  • It serves as a safety net to make sure that the child could fulfill his/her education goals.
  • Child plans also help a child to have a lump sum amount as payout in case of any untoward situation with parents. This amount helps the child to pursue education without difficulty.
  • Further, in case of the policyholder's (parents') death, the future insurance premiums are paid by the insurer and she/he receives the maturity benefits at the end of the policy.

Saving Plan and Investment plans are the two types of child plans available.

In a savings plan an individual pays regular premiums for the required time period and when the policy matures the policyholder receive guaranteed payouts. On the other hand, in an Investment Plan, the amount is invested in the market. Here, the premium paid by the policyholder for a particular duration of time is invested in debt and equity funds. These are risky, market-linked policies and allow good returns on investment.

It is a kind of insurance policy that allows protection against the child's future in terms of education and higher studies. It allows the parents an opportunity to save a capital for their children to ensure their good future. This saving helps the child to obtain the education of their choice.

A child insurance plan is important because it allows parents to save enough for their child's future. Further, it allows parents to make sure that their children do not have to compromise on their dreams because of the financial crunch. So, if you want to secure the future of the child financially, you must buy the best policy for child education.

Yes, you can easily withdraw the money after completion of 5 years of the policy. Partial withdrawal is also possible if required for the child’s specific needs (if any).

Yes, the proceeds received from a child plan as well as the money that the nominee receives in case of sudden death of parents or at maturity is totally tax-free.

Ideally the right time to plan a child education plan is when the child is born or before he/she starts school. This is because it will give enough time for the parents to have a lump sum capital. However, if you miss it at that time, you can still buy a child plan anytime during the schooling of the child to save for his/her higher education.

Yes, you can buy such a plan for your child aged 15-years. You can use either offline or online mode to buy such a plan. This plan will help the child receive a good amount of capital in case of sudden death of the head of the family.

In a child plan, a nominee is generally the person appointed by the policyholder to take care of the financial records of the insured after his/her death. The nominee has the responsibility to disburse the capital among the legal inheritors. A beneficiary, on the other hand, can either be a financial institution in certain cases, while in others the nominee and beneficiary can be the same.

Yes, under section 80 C of the Income Tax Act, you can have tax benefits on the premium that you pay for your child plan.

To select the right child insurance plan, you may consider aspects like:

  • Tax benefits
  • Monthly savings
  • Coverage
  • Children in the family
  • Market situations
  • Government policies etc.