Child Savings Plan

You should start investing in a child savings scheme when your child is born or during the first few years of their life. This way, you can determine the policy period and the time needed for your savings to grow. Since the savings are goal based, you can ensure that by the time your child is ready for higher education, these funds will be available for their education.

The minimum amount that you want to invest in a child savings plan will depend on the policy of your choice as well as the minimum premium amount permissible under the policy.

You can choose to invest in a child savings plan until the time you have adequate savings to meet your child’s future goals. For instance, if you are saving for your child’s college education, start saving in a child savings plan during their early years so that the policy can offer the savings as a maturity benefit when they finish school education.

Yes, the nominee for a child savings plan can be a minor. When you buy a child savings plan, the nominee can be your child, who could be well below the age of 18 years at the time of nomination.

The tax benefits offered under a child savings plan may vary depending on the specific child savings plan you choose. However, these are the tax benefits you can get from your child savings plan

• The amount invested in a child savings plan through premiums is eligible for tax exemption under Section 80C of the Income Tax Act up to a maximum limit of ₹1.5 Lakh per year.
• The death benefits or the maturity proceeds, including the interest earned on the investment, are exempt from tax under Section 10(10D) of the Income Tax Act.

The best way to save money for your child's future is to start early and invest regularly. While there are different traditional savings options, you should go for a child savings plan as it comprises a savings and investment component as well as a life cover. The life insurance cover can secure your child’s future goals with adequate financial support in your absence.

You can customize the coverage, the policy term, and the payout mode of the child savings plan to save more efficiently for your child’s future.

The amount of money you should save for your children depends on several factors, such as your financial goals, your income, the age of your children, and the lifestyle you want to provide for them. However, also consider the present and future rate of inflation when saving money so that your savings can combat the inflation rates.