5 Features of Child Savings Plan in India

Child Savings Plan - Features to Look Out For

Whether you believe the world will become more like a science fiction film or will remain the same, you must be financially prepared for the future. Children are particularly vulnerable to future uncertainties and the financial stress that comes with them.

Life insurance and investment are the only options to deal with your future financial requirement. Your investments will grow while you are alive, but insurance will cover your child's goals if you are unable to do so. The best child savings plans, on the other hand, will aim for a lot more.

The best child savings plan in India has five distinct features.

1. Long-Term Investment Options

Any investment option will not suffice; the perfect investment strategy for your child should include appropriate long-term and short-term investment options. Every asset class or investment option has its own risk-return profile. Each investment requires a specific time to offer the best risk-return profile based on this risk-return profile.

As a result, a long-term investment option or asset class, such as equity funds, may be ideal as a child savings plan.

However, as you get closer to your goal, you'll need to put your money into more secure investments. As a result, the child plan should include a fixed income or debt fund option that you can use to protect your funds.

2. Goal Protection

We've already mentioned that insurance is an important component of a good child's future plan. Simple life insurance, which pays out a lump sum upon the death of a parent, is insufficient. Because the child will eventually need to achieve the goal of higher education and independence, the insurance must be for the goal.

This is exactly what the goal protection feature does. If this option is available in your child savings plan, your family will receive not only the life cover amount, but also return on the investment. The plan will mature when it is supposed to and pay the child the maturity value.

3. Automated Risk Management

When investing for the long term, say 5 years or more, you can take a little more risk in exchange for a higher growth rate. For example, you invest a larger portion of your total investment in the plan's equity growth funds.

4. Option of a Tax-Free Partial Withdrawal

Higher education is usually a gradual climb with multiple milestones rather than a single destination. The best child plan should cover all of these milestones while also reducing your stress levels.

The best child plan will allow you to withdraw from the accumulated fund without incurring any tax consequences or affecting your investment. You can take multiple partial withdrawals from these child plans while continuing to invest in the next.

The child plan allows you to invest in both your child's higher education and marriage goals at the same time.

5. Reduced Management Costs

You'd think that an investment product that includes features like automatic portfolio management, life insurance, and goal protection would be costly. Fortunately, the situation is reversed.

How Can You Make Your Child Savings Account Tax-Proof?

A child plan is a long-term investment with potentially significant capital gains. As a result, tax efficiency becomes critical in this situation, and here's how to ensure it :

"Begin with a sum assured that is at least 10 times your annual income."

For example, if you plan to begin investing Rs. 1 lakh per year, make sure you have a life insurance policy with a minimum coverage of Rs. 10 lakhs. When you want to increase your investment in the plan in the future, this will help you keep it tax-free.

Plans for children are life insurance plans. Generally, all life insurance plans come with tax benefits. However, these benefits are in accordance to the current tax laws that are subject to change from time to time. A few years down the road, you'll probably want to put more money into the plan. As a result, the additional life insurance.

As a result, using the best child plan will enable you to not only invest in your child's future but also to protect it with maximum tax efficiency.


The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

Suggested Plans

Bharti AXA Life Guaranteed Wealth Pro

  • A non-linked, non-participating individual savings life insurance plan
  • Flexibility to choose the payout structure
  • Multiple income options
  • Option to receive tax free income beginning from the second policy year itself
  • Option to get lifelong income along with life cover till 100 years of age

Bharti AXA Life Super Series

  • A non-linked non-participating individual life insurance savings plan
  • Range of investment duration and returns
  • Guaranteed money back benefits (provided policy is in force and all due premiums have been paid)
  • Income tax benefits (as prevailing tax laws in India that are subject to changes)

Bharti AXA Life Shining Stars

  • Non-linked, non-participating limited pay endowment Life Insurance plan
  • Designed to take care of the financial needs of your child.
  • Flexibility to opt between 2 Maturity Payout Options
  • Flexibility in Policy Term/Premium Payment Terms
  • A great short-term investment option for a child insurance policy.