Need Rs 40 lakh for your child's future? You can build this fund through these 3 LIC schemes..
With the birth of a child, the responsibilities of parents also increase. From the very beginning, concerns arise regarding saving for the child's education, college, and future career. In today's times, quality education has become quite expensive. If you wish to have a fund of ₹30–40 lakh by the time your child reaches the age of 18 to 25, it is essential to start saving well in advance. By setting aside a small amount every month, you can work toward achieving this goal.
There are several investment options available for children, including plans from LIC that combine insurance with savings. Three such LIC plans—Amritbal, Jeevan Tarun, and the New Children’s Money Back Plan—are designed with the future needs of children in mind. However, the investment structure and the timing of payouts vary across these plans; some offer a fixed "guaranteed addition," while others provide payouts at different stages based on the child's age.
LIC Amritbal
If you want a fixed additional amount to be added to your investment every year, the LIC Amritbal plan could be a suitable option. Under this scheme, a guaranteed addition of ₹80 is provided for every ₹1,000 of the basic sum assured for each completed policy year. In other words, the longer the policy term, the more years of additions will accumulate.
Parents can choose to invest in LIC’s Amritbal, Jeevan Tarun, or New Children’s Money Back Plan based on their specific requirements.
This plan is available for children aged between 30 days and 13 years. The maturity age can be set anywhere between 18 and 25 years. Parents have the flexibility to pay the entire premium as a lump sum or in installments over a limited period. Upon the completion of the policy, the basic sum assured, along with any guaranteed additions accrued during the term, is paid out. The minimum basic sum assured under this plan is ₹2 lakh.
When a child reaches college age, a significant amount of money may be required to cover expenses such as tuition fees, hostel costs, and other related expenditures. Keeping this in mind, the LIC Jeevan Tarun plan offers various payout options. The plan provides the flexibility to receive a portion of the sum assured annually when the child is between 20 and 24 years of age.
Parents can choose from four different payout options under this plan. In the first option, no payouts are made for a five-year period, and the entire basic sum assured is paid out when the child reaches the age of 25. Under the second, third, and fourth options, the policyholder receives 5%, 10%, or 15% of the basic sum assured, respectively, each year between the ages of 20 and 24. The remaining balance is then paid out at the time of maturity. Additionally, bonuses may be payable in accordance with the terms and conditions of the policy.
How much of a fund can be accumulated by depositing ₹5,000 per month?
Suppose you purchase a Jeevan Tarun policy at the time of your child's birth and set a budget to pay a premium of approximately ₹5,000 per month. This amounts to an annual payment of about ₹60,000. Over a premium-paying term of 18 years, the total contribution would be ₹10.80 lakh. Based on this example, the child could receive approximately ₹9 lakh between the ages of 20 and 24—the typical college-going years. Subsequently, at the age of 25, a maturity amount estimated between ₹22 lakh and ₹26 lakh is expected. The actual amount will depend on the chosen policy option, bonuses, and other terms and conditions. LIC New Children’s Money Back Plan
Under this plan, 20% of the Basic Sum Assured is paid out when the child reaches the age of 18. Subsequently, another 20% is paid at the ages of 20 and 22. In total, 60% of the Basic Sum Assured is disbursed across these three installments. The remaining 40% is paid when the child turns 25. Additionally, the policy may also include bonuses and a Final Additional Bonus.
This plan is available for children aged 0 to 12 years. Premiums are payable until the child reaches the age of 18. The funds received between the ages of 18 and 25 can be utilized for education, career pursuits, or other significant financial requirements.
Things to consider before investing
When setting a goal—such as accumulating ₹40 lakh for your child—do not base your decision solely on the name of the policy or the projected returns.
First, consider the child's current age, when you will need the funds, and what monthly premium amount fits within your budget.
Also, verify whether the maturity payout is guaranteed or if it depends on bonuses.
Some LIC plans offer an optional 'Premium Waiver Benefit' rider.
Additionally, depending on eligibility and current tax regulations, tax benefits may be available under Section 80C and Section 10(10D).
Where else can you invest, apart from LIC?
It is not necessary to rely solely on insurance policies for a child's future. Parents may also consider options such as the Sukanya Samriddhi Yojana, Public Provident Fund (PPF), post office savings schemes, and mutual fund SIPs. The Sukanya Samriddhi Yojana is specifically designed for daughters, while the PPF and post office schemes offer long-term savings opportunities. On the other hand, mutual fund SIPs offer the potential for long-term wealth creation, albeit with market-linked risks. Before investing in any LIC plan, be sure to obtain an official benefit illustration from the company, based on your age, the premium amount, and the specific options you have chosen.