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Best Monthly Saving Schemes for Child Education

Planning for your child's financial future is one of the most crucial duties of a parent. With the increasing costs of education, healthcare, and other essential needs, it’s essential to begin investing early to build a solid financial foundation.Read More

Every parent aims to offer their children a secure and comfortable life, not just in the present but also for their future. Given the rapid rise in expenses, including educational costs, starting to save early and understanding the best saving plans for children is vital to ensure a financially stable future for your child. Let’s explore some of the best saving schemes for children.Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRosy Pathak
AboutRosy Pathak
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Rosy Pathak, AVP- Product and Brand Marketing at Bajaj Allianz Life Insurance carries over 17 years of experience in Marketing and a demonstrated history of working in the insurance industry. She is skilled in Product Management, Planning and Strategy, Project Management, Marketing and Communication.
Written on: 28th Jan 2025
Modified on: 29th Jan 2025
Reading Time: 15 Mins
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Fixed Deposit or Recurring Deposits
 

Fixed Deposits (FDs) offer safe, stable returns. Many banks offer special children's FD plans, which usually comes without the premature withdrawal option. Recurring Deposits (RDs) provide a monthly savings plan for education, with regular small investments at a fixed interest rate, though returns may be slightly lower than FDs. Both are  options for long-term savings. [1]

Sukanya Samriddhi Yojana (SSY)
 

The Sukanya Samriddhi Yojana (SSY) is a Government of India and one of the best savings schemes for the financial future of girl children. It can be opened before the child turns 10 and runs for 21 years or until marriage. Parents can open an account at any post office or authorized bank. The interest rate is declared quarterly by the government , and the accumulated amount can be used for the child’s education or marriage.[1]

Gold
 

Gold is a valuable asset that protects against inflation due to its non- depreciating nature  . Besides physical gold, digital options like Gold ETFs, Sovereign Gold Bonds (SGBs), and gold mutual funds are available. You can invest in gold for your child’s future through these options, providing a stable and inflation-resistant asset. Digital gold is safer, eliminating storage costs and wastage charges, and is more flexible, allowing easy selling of units on the stock exchange. [1]
 

PPF
 

The Public Provident Fund (PPF) is a government-backed savings scheme with a 15-year maturity period. It offers higher interest rates than fixed deposits and provides tax-free returns under the Exempt-Exempt-Exempt (EEE) model, meaning the principal, interest, and maturity amount are all tax-free. The scheme has a lock-in period, making it ideal for long-term savings, especially for securing a child’s future. The government reviews the interest rate every quarter, providing a stable investment option. [1]
 

Life Insurance
 

There are life insurance policies designed specifically for children. These policies typically provide life cover and death benefits. The policyholder pays regular premiums, and the invested amount grows over time. Upon maturity, a lump sum is paid out, which can be used for significant expenses like education or marriage.

These life insurance policies also offer tax benefits. Premiums paid can be claimed as deductions under various sections of the Income Tax Act, of 1961. Additionally, the benefits received – including death benefits and the maturity amount – are tax-free up to certain limits.[1]
 

Unit Linked Insurance Plans (ULIP)
 

Unit-Linked Insurance Plans (ULIPs) are type of life insurance plan and are a combination of market-linked investment and life insurance. They provide both market-linked returns and life cover, giving you a dual advantage. As an investor, you can choose how your funds are distributed across various asset classes. ULIPs come with a five-year lock-in period, making them a good option for long-term savings for your child’s education or future financial goals.[2]  It is important to note that investments in ULIPs are market-linked and market volatility can affect your investments.
 

Systematic Investment Plan (SIP)
 

Systematic Investment Plans (SIPs) are a smart way to invest in mutual funds. Parents can invest small amounts regularly in equity or debt mutual funds, making them flexible and affordable. SIPs in equity funds for long-term goals like higher education can grow your money. The benefits of compounding and rupee cost averaging make SIPs a popular choice for securing a child’s future. [2]
 

Mutual Funds
 

Mutual funds pool money from several investors to invest in a mix of stocks, bonds, and other securities. Equity mutual funds are for long-term goals like education, offering  returns but with more risk. Debt mutual funds are safer, providing steady returns with lower risk. Parents can choose mutual funds based on their financial goals and risk preferences.[2]

Conclusion
 

Investing in your child’s future is a crucial step in securing their education and financial well-being. By exploring options like Life insurance, PPF, Sukanya Samriddhi Yojana, SIPs, and mutual funds, parents can make informed decisions that help build a strong financial foundation for their children.
 

FAQs

What is the best investment plan for children in India?
 

Popular options include life insurance, PPF, Sukanya Samriddhi Yojana, SIPs, and mutual funds.
 

What is an SIP (Systematic Investment Plan)?
 

A SIP allows you to invest a fixed amount regularly in mutual funds, offering the benefits of compounding and rupee cost averaging.
 

What are the benefits of investing in Gold for children?
 

Gold is a good hedge against inflation and can be invested digitally through Gold ETFs, SGBs, and gold mutual funds. [1]
 

What is the lock-in period for PPF?
 

PPF has a lock-in period of 15 years. [1]
 

Are children's life insurance policies a good option?
 

Yes, they provide life cover and lump-sum payouts for education or marriage and offer tax benefits. [2]
 

How do Unit Linked Insurance Plans (ULIPs) work?
 

ULIPs combine life insurance and investment , offering market-linked returns with a five-year lock-in period. [2]
 

Are mutual funds a safe investment for children?
 

Mutual funds can be safe (debt funds) or risky (equity funds), depending on the type of fund chosen.
 

Can I claim tax deductions for investments in child insurance plans?
 

Yes, many child insurance plans like child based ULIPs offer tax deductions under the Income Tax Act.
 

References:

Life Insurance Guide -Child Related Articles

Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
Long term investment plans - What Are Their Benefits?

A suitable financial plan may be defined by its components. Amongst other things, one aspect, it may be incomplete without, is a steady amount of investment.

Read More
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IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

 The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility

BJAZ-WEB-EC-12458/25

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*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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^Subject to Section 10 (10D) conditions i.e. aggregate annual premium for ULIP policies issued on or after 1st February 2021 does not exceed Rs. 2.5 Lakhs.

1Minimum premium mentioned is applicable for Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01) and is subject to policy terms and conditions.

#Source: https://economictimes.indiatimes.com/investments-marts/eight-crucial-numbers-to-ensure-financial-success/10-times-the-annual-income-is-your-life-insurance/slideshow/16699748.cms . Subject to availability in Bajaj Allianz Life ULIP Plans. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

*Benchmark: Nifty 500 Multicap Momentum Quality 50 Index past 5 CAGR Returns, as on 31st December 2024. Past returns of a fund are not necessarily indicative of the future performance of the fund. | Please consult the financial advisor before investing.

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01) are only the name of the unit linked insurance contracts and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

Nifty 500 Multicap Momentum Quality 50 Index Fund is available Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01)

In addition to the already existing funds, Nifty 500 Multicap Momentum Quality 50 Index Fund is now available with the above mentioned products. Customer has an option to choose from other available funds apart from Nifty 500 Multicap Momentum Quality 50 Index Fund.

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Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any Call made, including via Voice over Internet Protocol & WhatsApp, SMS or WhatsApp messages, in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

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