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Child Savings Plan
Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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What are Child Savings Plans?

Child Savings Plans are plans that help build a corpus to fund your child’s education, marriage, and other expenses related to the child. These plans offer the dual benefit of savings and life insurance. In the event of the death of the parent, the child will receive a lump sum amount, which can be utilised to pursue higher education. 

There are an array of child savings plans with different features and benefits. You can choose the best saving plan for child with a 10 to 20-year term and with a host of benefits. While choosing a child savings plan, it is recommended to choose a long-term plan and play the premium regularly to keep the policy active. 

Why is it Important to Have a Children's Savings Plan?

Shaping your children’s future depends on the quality of education they get and the financial backing they have if they decide to establish a business. With the rising costs due to inflation, it is important to have robust financial planning now to secure the future of your child. Children savings plan helps provide the best education and financial backing for any venture that your children wish to start. A well-designed saving schemes also provides a robust financial safety net for your child's future, providing financial security and builds a strong foundation for your children and will bolster their confidence.

How Do Child Savings Plans Work?

A child savings plan provides dual benefits. It helps save funds for your children’s education children’s marriage, and other major expenses. It is also a financial safety net for your children in case of eventualities. This is how the children savings plan works:

If you purchase a child savings plan and pay the premium regularly throughout the policy term, you can use the maturity amount for your child’s higher education. In case of any eventuality during the policy term, the death benefit ensures that your child can pursue his/her higher education and fulfil his/her dreams. 

Key Benefits of Child Savings Plans

The main objective of buying a children savings plan is to fund their future expenses like higher education, marriage, and establishing a start-up. It also provides financial security to your children in your absence. The key benefits of a child savings plan are:

1

It provides the benefit of savings as well as life insurance. It secures your child’s future and provides financial security to him/her in your absence. 

...Read More

2

This child saving scheme comes in handy in emergencies. You can make part withdrawals whenever you need funds.

...Read More

3

In case of an eventuality, your children get a lump sum payment by way of a death claim. Also, the plan continues to be live, and the future premium payments are taken care of by the insurance companies. At the end of the policy term, they receive a payout that will ensure they fulfil their dreams at any cost.

...Read More

4

The premiums paid for a child savings plan are eligible for deductions up to Rs. 1.50 lakhs under Section 80C of the Income Tax Act, 19613. The payout received also has tax benefits under Section 10(10D) 3.

...Read More

Best Saving Plan for Child in India 2025

Some of the Best Child Investment Plan Options

Securing your child's future requires a well-defined financial plan. Here, we explore some of the most reliable investment options to consider:

 

Sr. No.

Best Saving Plan for Child

Ideal for Below Mentioned Goals

Tax Benefits Offered

1

Systematic Investment Plans (SIPs)

For Both High and Low risk investors

Under Section 80C (Maximum investment of Rs 1.5 Lakhs)

2

Child ULIPs

Useful in meeting a range of financial goals like retirement planning, child's education/marriage, down payment for a house, etc.

Under Section 80C and Section 10 (D). (Maximum deduction that can be claimed is Rs 1.5 lakhs.)

3

Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) aims to secure a girl child's future by helping parents/guardians save for her education and marriage.

Under Section 80C (Maximum investment of Rs 1.5 Lakhs) .

4

Debt Funds

Debt funds provide low-risk investments in fixed-income securities, offering stable returns and capital preservation—ideal for building a corpus for your child's future needs.

-

5

Recurring Deposits (RDs)

An RD promotes disciplined savings, making it easier to build a strong financial foundation for your child's future.

-

6

Public Provident Fund (PPF)

It is relevant for individuals with a low-risk appetite to save money over the long term for retirement planning/financial goals.

Under Section 80C (Maximum investment of Rs 1.5 Lakhs)

7

National Savings Certificates (NSCs)

NSCs are ideal for those prioritizing safety and stability in their investments, offering fixed returns with minimal risk.

Under Section 80C (Maximum investment of Rs 1.5 Lakhs)

8

Make Investments in Gold

Gold investments offer portfolio diversification, high liquidity, potential for strong returns, and protection against inflation.

-

9

Invest in Equity Mutual Funds

For tax benefits, opt for tax-saving mutual funds, also called ELSS or equity-linked saving scheme

Under Section 10(D). (Maximum investment of Rs 1.5 lakhs.)

10

Life Insurance

Provides dual benefit of investment and insurance.

Under Section 80C (Maximum investment of Rs 1.5 Lakhs)

 

  • Systematic Investment Plans (SIPs): 

A Systematic Investment Plan (SIP) provides a structured approach for building wealth with mutual funds. Through SIPs, you can consistently invest a predetermined amount at regular intervals into a chosen mutual fund scheme. This flexibility allows you to tailor your investments to your risk tolerance and financial goals. 

Whether you seek capital appreciation through equity funds, income generation via debt funds, or a balanced approach with hybrid funds, SIPs empower you to gradually accumulate savings for your child's future needs.

  • Child ULIPs: 

Child ULIPs combine insurance coverage with a plan to build financial security for your child's future. They function by allocating a portion of your premium towards a life insurance cover for your child while the remaining amount is invested in market-linked funds. This allows for the potential for growth alongside the provision of a safety net in case of unforeseen circumstances. However, it's crucial to understand the associated fees and risks of investing in a Child ULIP.

  • Sukanya Samriddhi Yojana (SSY):

For parents seeking a safe and secure investment option specifically for their girl child, the Sukanya Samriddhi Yojana stands out. This government-backed scheme boasts attractive interest rates and offers a maturity period aligned with a girl's coming of age (21 years). Contributions can be made until the child turns 14, allowing for gradual wealth accumulation. 

The Sukanya Samriddhi Yojana presents a compelling proposition for those prioritising risk-averse planning for their daughter's future.

  • Debt Funds: 

Debt mutual funds offer a relatively low-risk approach to building a corpus for your child's future needs. These invest in fixed-income securities like government bonds and corporate debentures, providing stable and predictable returns. Debt funds are suitable for investors seeking capital preservation and a steady stream of income.

  • Recurring Deposits (RDs): 

Recurring Deposits (RDs) are a popular option, especially for those with a regular income flow. They allow you to invest a fixed amount at regular intervals, fostering a disciplined savings habit. RDs offer guaranteed returns, making them ideal for short-term financial goals like higher education expenses.

  • Public Provident Fund (PPF): 

The Public Provident Fund (PPF) is a government-backed savings scheme with attractive interest rates. PPF accounts offer tax benefits on investments and maturity amount, making them a compelling long-term investment option. However, PPF comes with a lock-in period of 15 years with partial withdrawal flexibility after the seventh year.

  • National Savings Certificates (NSCs): 

National Savings Certificates (NSCs) are another government-backed savings scheme offering guaranteed returns. Investors can choose investment terms ranging from 1 to 5 years. NSCs are suitable for those seeking a fixed and secure investment option with regular interest payouts.

  • Make Investments in Gold: 

Gold has historically served as a valuable hedge against inflation. Investing in physical gold like coins or bars offers a tangible asset and a potential safeguard against market volatility. Alternatively, digital gold schemes or gold Exchange Traded Funds (ETFs) provide a convenient and liquid way to participate in the gold market.

  • Invest in Equity Mutual Funds:

Equity mutual funds offer the potential for high returns through diversification across various companies. Systematic Investment Plans (SIPs) allow for regular investments with a smaller amount, fostering a disciplined approach and benefiting from rupee-cost averaging. It's crucial to remember that equity markets are subject to fluctuations, so a long-term investment horizon is recommended for this option.

Key Investment Targets You Should Aim For

The key investment targets you should aim for while choosing a child saving scheme are:

School Education

School Education

With the fees of top schools being expensive, you need to plan for your child’s school education if you wish the best for your child.

Higher Education

Higher Education

Specialised courses like engineering and medicine are expensive. If your children choose to go for higher studies abroad, you will need to have a financial plan to support their ambition.

Marriage

Marriage

This is one of the most emotional milestones in one’s life. If your children choose to marry at the beginning of their careers, they may need your financial support to cover the marriage expenses. So, children’s marriage should be one of the goals in your financial planning.

Why Do You Need a Child Savings Plan?

A child savings plan allows you to set aside money and secure your child's future. Whether for your child's education, higher studies, or emergencies, starting to save at an early age ensures sufficient funds during times of need. 

Let’s explore in detail about why you should get a child savings plan:

  • Birth of the Child

    • Giving birth to your child is a perfect time to start planning for their future. Opening a child savings plan helps you start saving for your child's needs. It is always beneficial to begin at an early age. The earlier you start, the more time you give your money to grow from the power of compounding. Even small contributions during this time help you create a strong financial foundation for the future of your child.

  • Education

    • Education constitutes a significant portion of expenses paid by parents. The cost of a child's education rises significantly as they grow up. Thus, by establishing a savings plan for education or a child education plan, you can prevent financial stress.

    Begin by estimating the costs of schooling, including uniforms, books, tuition fees, and other expenses. Following a dedicated savings plan, enough funds can accumulate over time and help you cover the costs without sacrificing your own life goals.

  • Higher Education

    • When your child grows up, you can send them abroad for higher education. Saving for higher education at an early age requires substantial funds and more when accounting for inflation. Planning beforehand allows you to avoid relying on loans and thus provides your child with the freedom to focus on studies without considering further financial pressure.

  • Marriage

    • Once your child becomes an adult, they might need support during marriage. Wedding costs include the costs of lavish ceremonies, receptions and other expenses. Opting for a child savings scheme allows you to accumulate funds to achieve this milestone, ensuring that your child's special day is memorable without causing further financial strain.

  • Emergencies

    • Life is quite unpredictable, and emergencies can arise at any time. Be it a medical emergency or any unexpected situation, having an emergency fund can offer peace of mind. Accumulating more savings enables you to handle emergencies without affecting your regular budget or savings goals.

Tips to Save Money for Your Children's Future

Some of the tips to save money for your children’s future are:

  • A long-term plan provides better returns. If you start early, you can invest small amounts to suit your pocket for longer periods.

  • Putting aside small amounts regularly helps accumulate money that can come in handy for your child’s future.

  • Look for additional benefits that will enhance your maturity proceeds while purchasing a life insurance plan.

  • The amount you save should be adequate to fulfil your child’s financial needs and should not exceed your budget. You should be able to pay premiums regularly to keep the policy alive. 

Which Child Savings Plan is best for You?

To choose the best savings plan for a child, you must take into consideration your financial goals, risk appetite, investment horizon, budget, etc. If you are a new investor and unsure which plan to choose, consult a financial advisor.

Here are some things you should consider while choosing an investment plan for your child:

  • Age and Financial Goal of Your Child: The younger your child will be, the more you can invest and the more time you have to save for your child's future.
  • You’re Investment Horizon: Plan for how long you can invest before you can access the money.
  • Your Budget: Choose the premium amount aligning with your budgetary constraints.
  • Risk Tolerance: Decide how much risk you are capable of taking with the investment.

How To Choose the Best Child Savings Plan?

Choosing the best child savings plan is essential to secure your child's future. You should consider factors such as insurance coverage, flexibility, the credibility of the insurer, and tax benefits. Here is a summary of the most important factors to consider while choosing the best child savings plan:

  • Purpose

    • Before choosing your child's savings plan, find out what you wish to accomplish. Knowing the purpose of saving will also let you reach your goals with ease. Are you planning to save for your child's education, emergency fund or marriage? Choosing the right plan caters to your unique needs. So, list your goals and consider whether they are short or long-term to pick the right investment.

  • Premiums

    • Premiums are the amount you need to pay regularly to keep the plan active. Make sure to keep your premium amount budget-friendly. Choose either a fixed or flexible premium. A fixed premium ensures consistency, while a flexible premium can be adjusted to your financial situation.

  • Flexibility

    • Check out the flexibility of the child savings plan you have chosen. Make sure to choose a policy term and a premium paying term that aligns with your goals and budget. Also, look for a plan that provides flexibility, as this helps you adapt to your financial situation while considering your child's future needs.

  • Insurance Coverage

    • Choose the life insurance coverage the plan offers. This enables you to determine the amount your child ought to receive in your sudden demise. The coverage amount, however, should be sufficient to meet their future needs. Opting for a good plan ensures that you will receive both insurance protection and an opportunity for savings.

  • Credibility of Insurer

    • The credibility of an insurer is an important factor when choosing the right plan. Make sure to conduct thorough research about the insurer, studying the customer reviews and financial stability. Choose only a reputed company with a good track record providing customers with better security and reliable services.

  • Tax Benefits

    • You are eligible to claim tax benefits depending on the premium of the policy under Section 80C of the Income Tax Act. The death benefits are also exempted from taxes under Section 10 (10D) of the Income Tax. This thereby allows you to save money while continuing to invest for your child's future.

Factors To Consider Before Choosing a Child Savings Plan

Here are some factors you should consider before opting for a child savings plan:

  • Purpose of the Plan

    • Make sure to determine the primary goal or the main purpose of your savings. Are you investing in your child's education, marriage, or some other purpose?

  • Duration

    • Take into consideration the time horizon till you consider the funds to utilise. If your child is young and you are investing to save for meeting college expenses or marriage, you then will have a comparatively long time frame in comparison to someone whose child is already a teenager.

  • Flexibility

    • Before considering a child savings plan, check its flexibility. Find out whether you can adjust the frequency of payment or tenure as per your requirement. Is it possible for you to increase or decrease the contribution amount over time? There are some savings plans which allow you to make lump sum payments. A flexible plan caters to your unique needs.

  • Returns and Performance

    • While deciding to opt for a child savings plan, consider the returns and performance. If your chosen plan is investment-linked, make sure to review its past performance and associated risks. Past results, however, don't guarantee future returns, but they can provide you with an overall idea. This helps you gain a thorough understanding of the potential growth of investment over time.

  • Tax Benefits

    • Several child savings plans offer tax benefits. You can avail these benefits according to the amount you choose to invest, the returns, and other factors. Thus, make sure to check out the tax implications before selecting a plan. Understand the amount you can save on taxes and whether the plan is eligible for deductions.

  • Liquidity

    • Find out how easy it is to withdraw money from your chosen savings plan, especially taking into consideration emergency situations.

  • Reputation of the Provider

    • Before you proceed to choose a child savings plan, conduct a thorough research about the reputation of the provider. Search for any well-known or reputed institution or company holding a strong track record. A reputable provider will be more likely to provide reliable services and make your investment in your child safe and secure.

  • Inflation

    • While choosing a child savings plan, consider the rate of inflation. Due to inflation, the value of your saved money depreciates over time, so your savings might not be enough to cover future costs. Make sure to plan wisely and invest in inflation-beating assets to ensure sufficient growth over time to meet the future needs of your child.

  • Automatic Features

    • There are many child savings plans with an automatic mode of investment. This might help in ensuring financial discipline. Moreover, these kinds of features also let your savings grow over time. The invested money can also be adjusted with inflation and provide better financial security when looking at your child's future.

  • Consultation

    • Before choosing a child savings plan, consulting with a financial advisor is a must. A financial advisor can guide you to understand your financial goals and objectives. This guidance thereby enables you to reach an informed decision making and choose the best plan for the future of your child.

Which Child Savings Plan is Right for You?

Some of the best child savings plan to secure your child’s future are:

1
1

Sukanya Samridhi Scheme

Sukanya Samnridhi Scheme is a government-backed scheme designed specially for a girl child. It is a low-risk investment that matures when the child turns 21 and can be used to fulfil her goals.

...Read More

2
2

Systematic Investment Plan (SIP)

SIP allows you to invest in a mutual fund scheme of your choice and at the frequency chosen. You can build a corpus for your child’s future over a period.

...Read More

3
3

Public Provident Fund (PPF)

It is a government-backed scheme with low risk. With the power of compounding interest in PPF, your investment will grow exponentially in 15 years. The part withdrawal facility after 7 years provides funds to cater to your child’s expenses.

...Read More

4
4

Debt Funds

The investment by debt funds is in fixed-income securities like bonds. They are less riskier than equity mutual funds. According to SEBI, there are 16 types of debt funds, and you can choose any.

...Read More

5
5

Gold

Investment in gold offers high liquidity, and the funds are immediately available during emergencies. The investment can be in gold coins, gold bonds, gold jewellery or in gold Exchange Traded Funds (ETFs).

...Read More

6
6

Term Insurance Plans

A term insurance plan is a common plan chosen for securing a child’s future. Look for a plan with life cover for financial security.

...Read More

FAQs on Child Savings Plan

1 What is the child savings policy?

A child savings policy is a savings plan that helps fund the goals of your child at different life stages.

2 How do I plan savings for my child?

Determine the goals and budget your savings accordingly. Start early so that you can invest less for higher returns.

3 What are the documents required while buying a savings plan for children?

You would require submitting a duly filled Proposal form along with KYC of the child and the parent/guardian. You might need to submit other documents, only on specific request, during the application process.

Here are some of the documents you might have to submit:

  • Proposal form
  • Identity proof (passport, voter ID card, Aadhaar, driving Licence)
  • Address proof (Voter ID card, Aadhaar, Passport, Utility bills, Driving Licence)
  • Age proof
  • Income proof

4 What are the tax benefits associated with Child Savings Plans in India?

The premium payments have tax benefits under Section 80C3, and the maturity/death payout has tax benefits under Section 10(10D)3. 

5 What is the minimum amount for investing in a Child Savings Plan?

The minimum amount for investing in a child savings plan is Rs. 250/-

6 What is the expected tenure period for a plan to receive its maximum value?

The maximum tenure for a plan to receive maximum value is 5 years but can vary with the institution.

7 Do children's savings plans provide partial withdrawal?

Yes. Children's savings plans provide partial withdrawal.

8 Can a minor be a nominee in a savings plan for children?

Yes. A minor can be a nominee in a savings plan for children but should be represented by a guardian.

9 What is the right time to start investing in a Child Savings Plan?

It is recommended to start early, as long-term investments provide higher returns.

10 What is the government savings plan for children?

The Sukanya Samriddhi Yojana is a popular government savings plan for a girl child. This plan is designed exclusively for girl children up to the age of 10 years.

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Disclaimer

1. Provided all due premiums have been paid and the policy is in force.  

3.  The above tax benefits are subject to conditions specified u/s 80C and u/s 10(10D) of the Income tax Act, 1961. The afore stated views are based on the current Income-tax law. Tax Laws are also subject to change from time to time. The customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

HDFC SL YoungStar Super Premium (Form No. P 501 UIN : 101L068V03) is a Unit Linked Non Participating Life Insurance Plan. Life Insurance Coverage is available in this product.   

HDFC Life YoungStar Udaan (101N099V04) is a Non-Linked, Participating, Life Insurance Plan. Life Insurance Coverage is available in this product 

^. Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.

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