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All you Need to know about Child Plans

A child is every parent’s pride and joy. Right from the time your child is an infant to when he/she grows up; he/she will always be your little bundle of joy. Caring for your child is always delightful, but in the current scheme of things, raising your kid may be very expensive. Hence, it is important to choose the right investment option to plan for your kid’s future. Child plan is one such investment option. In this article, we will understand what are child plans and does it make a good investment option for your child’s future. 

What is a Child Plan?

A child plan serves as an investment cum insurance plan which helps to finance your child’s plans such as education or marriage. A good child insurance plan also helps to guide your child’s future, in the event of a parent’s untimely death. 

The funds in the plan are also available for partial withdrawals whenever necessary.

Benefits of Child Plans

1. Secures your child’s future: 

When a parent takes child plans, the maturity benefit is assured and your child will get the benefit even after your death. Hence, your child’s financial future is secured. 

2.Helps to form an investment corpus

In addition to insuring your child’s future, the child plans also help you to form an investment corpus for child’s education and marriage. 

3. The premium is waived in case of a death 

In case of untimely death, the payment of premium is waived off. This ensures that after your death, your family members are not faced with the burden to pay the remaining premiums. 

4.Tax benefits 

Child Plans are one of the investment options for your children that also offer tax benefits under Section 80C of the Income Tax. Parents can save up to Rs. 1.5 lakh per financial year by investing in investment options under Section 80C.  

5.Choose a critical maturity period

Plans give the benefit to select a maturity date before the amount is likely to be needed. E.g., if your child would require money for his or her graduation, you can set the policy to mature around six months before the critical day. 

6.Flexible options 

Customers have the flexibility to pay the premium at various intervals such as monthly, quarterly or annually. They choose the interval that works best for them.  

7. Secured loans against child protection plans

Parents with child plans have the option to take secured loans. As secured loans are taken with collateral, the loan will be cheaper than unsecured loans. 

Disadvantages of Child Plans

The premium paid towards these plans is utilised to provide life cover as well as invest in assets.   

1.Not enough life cover 

Child Plans do not offer adequate life cover. Typically, one should have a life cover of at least 10 times of their annual income. While child plans offer parents to get back their premium paid after maturity in case of survival, term insurance is better option to avail life cover. Term insurance offers affordable adequate life insurance to individuals. All insurance companies offer term insurance. You can’t soley rely on child plan for life cover. 

2.Not enough investment  

These plans carry allocation charges, distribution charges among other charges. Hence, a certain percentage of the premium paid goes towards these charges. In this scenario, mutual funds or other investment options are better investment options for your child’s future. 

Through these options, you can start investing according to the time horizon of the goal.     


Child Plans combine the benefits of insurance and investment. However, a child plan is not a complete financial plan for your children’s future. You can look at child plan if you have term insurance and other investment options in place. 

So, before you invest in child plans, compare the different child plans and other investment options. 



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