Best LIC Child Plan in India for Low risk investors

Best LIC Child Plan in India for low risk investorsBest LIC Child Plan in India for Low risk investors


There are several investors who get scared about stock markets in India. There are some investors who feel mutual fund schemes are high risk as they invest in equity stocks. Those investors’ motive is to invest in safe insurance products and expect high returns. It is funny to expect high returns from insurance products. However, if you are one such risk investor, you can look at some of the LIC Child education plans in India. LIC is offering child insurance plans for children’s benefits in future. Which are the best LIC child plans in India?  How much returns, we can expect from the LIC child future plan?  Are there any alternatives to invest compared to LIC child plan outside the insurance segment? I would provide my 120 seconds of criticism where it can change your view too.

Also Read: Best Term Insurance Plans from LIC

What are Child Insurance Plans?


Child Insurance Plans are provided by the insurance companies to ensure the welfare of one’s children when they are not around. They are developed with a vision to provide financial support to the family for the child’s bright future if the parents meet an untimely death. Child Insurance Plans usually do not insure the child, but the life insured under such policies is the parents only who have a minor child. The underwriting is done on the life of parents and the details of the child are to be given in the policy. 

Overview about LIC Child Plans


LIC is one of the most trusted companies in terms of providing insurance to the people of India. The company offers variety of plans to cater the different requirements of the insured. In the same league, it also provides some good child insurance plans. 

What are various LIC Child Plans?


There are two popular child plans from LIC. a) LIC New Children Money Back Plan and b) LIC Jeevan Tarun.

A) LIC’s New Children Money back plan


It is a traditional policy with a money back plan. This plan is specially designed to meet the educational, marriage and other needs of growing children through Survival Benefits.

The following are its distinctive features:

1) This policy will vest in the name of the child who is the life assured and will then become the policyholder on the policy anniversary following the completion of 18 years of age.

2) It is a participating plan which is eligible to earn bonuses and the premium is paid for a limited term of the plan.

3) There is a deferment period for children less than 8 years. The risk cover will begin one day before the completion of 2 years of the policy commencement or one day before the policy anniversary, which coincides with or follows the completion of 8 years of age.

4) Being a money back child plan, survival benefit will be paid at the rate of 20% of the chosen sum assured at each policy anniversary following the attainment of 18 years, 20 years and 22 years of age of the life assured.

5) The policyholder may even choose to defer the receipt of the survival benefits to a later date within the duration of this LIC child plan.

6) On maturity, 40% of the sum assured, vested Simple reversionary bonus and a final additional bonus, if any, will be paid to the policy holder.

7) In case of death of the insured during the deferment period, only the paid premiums are returned.

8) In case of death post the deferment period, the sum assured on death which is the higher of the chosen sum assured or 10 times the annual premium, simple reversionary bonuses and a final additional bonus, if any, is paid, subject to a minimum of 105% of all premiums paid till the date of death.

9) The rebate is given in premium rates if paid half-yearly and yearly @ 1% and 2% respectively.

10) For choosing a higher sum assured of Rs 2 lakh and above, rebates are allowed in the premium. 

11) LIC premium Waiver Rider is available which promises waiver of future premiums in case of death of the proposer.

12) The premiums paid are eligible for income tax rebate u/s 80 Cof the Income Tax Act, 1961 and the claim received is exempt u/s 10 (10) of the Income Tax Act. 

What is the eligibility in this LIC Child Plan?


1) The minimum entry age is 0 years and maximum is 12 years.

2) The maturity age of this plan is 25 years.

3) The minimum sum assured is Rs 1 lakh and there is no maximum limit.

4) The minimum annual premium amount is Rs 24,000.

5) The premium can be paid either annually, half-yearly, quarterly or monthly.

6) The premium payment term is 10 years, 7 years or 5 years.

Your favorite: LIC Cancer Care Insurance is unique plan – Should you opt?

What are Sample Premium Rates in this LIC Child Plan?


This table shows the sample rates of the premium under this plan at different ages and at different levels of sum assured.

B) LIC Jeevan Tarun – 2nd popular child plan from LIC


Another popular child plan of LIC is LIC Jeevan Tarun. It is a plan which combines the features of Endowment plan and money back plan. The following are its features:

1) It is a participating child plan and as such eligible to earn bonuses depending upon the company’s profit experience. Simple reversionary bonuses and final bonus at the end of the plan, if any, is paid in this plan.

2) The premium paid under this plan is paid for a limited period only.

3) There are four options available in this plan for survival and maturity benefits as per the choice of the policy holder.

4) First option – no survival benefit is payable and only on maturity (25 years), 100% of the sum assured is paid to the policyholder.

5) Second option – 5% of the sum assured is paid every year as a money back for 5 years (after 20th year) and thereafter on maturity (25 years) 75% of the sum assured and the vested bonuses are paid.

6) Third option – 10% of the sum assured is paid every year as a money back for 5 years (after 20th year) and thereafter, on maturity (25 years) 50% of the sum assured and the vested bonuses are paid.

7) Fourth option – 15% of the sum assured is paid every year as a money back for 5 years (after 20th year) and thereafter, on maturity (25 years) 25% of the sum assured and the vested bonuses are paid.

8) Under this policy, the money back benefit will start to be paid only from the policy anniversary that coincides or follows the completion of 20 years of age, of the life insured and are payable for 5 years till the insured attains the age of 25 years.

9) For the children aged less than 8 years, there is a deferment period. The risk cover will begin one day before the completion of 2 years of the policy commencement or one day before the policy anniversary, which coincides with or follows the completion of 8 years of age.

10) The policy will vest in the name of the child who is the life assured and will then become the policy holder on the policy anniversary following the completion of 18 years of age.

11) In case of death of the insured during the deferment period, only the paid premiums are returned.

12) In case of death post the deferment period, the sum assured on death which is higher of 125% of the chosen sum assured or 10 times the annual premium, vested simple reversionary bonuses and a final additional bonus, if any, is paid, subject to a minimum of 105% of all premiums paid till the date of death.

13) Rebate is given in premium rates if paid half-yearly and yearly @ 1% and 2% respectively.

14) For choosing a higher sum assured of Rs 2 lakh and above, rebates are allowed in the premium. 

15) LIC premium Waiver Rider is available which promises waiver of future premiums in case of death of the proposer.

16) The premiums paid are eligible for income tax rebate u/s 80C of the Income Tax Act, 1961 and the claim received is exempt u/s 10(10) of the Income Tax Act. 

What are the Eligibility Criteria in the 2nd LIC Child Plan?


The eligibility criterion of both the child plans – LIC Jeevan Tarun and LIC, New Children Money Back plan is exactly the same. But, it has been mentioned again for your convenience-

1) The minimum entry age is 90 days and maximum is 12 years.

2) The maturity age for this plan is 25 years.

3) The minimum sum assured is Rs 75,000 and there is no maximum limit.

4) The minimum annual premium amount is Rs. 24,000.

5) The premium can be paid either annually, half-yearly, quarterly or monthly.

6) The premium payment term is is 8 to 20 years.

What are sample premium rates in LIC Jeevan Tarun?


A sample table has been given for you to show the sample rates of premium payable at different ages and at different options at a sum assured of Rs 100,000.

Are there any other LIC best child plans?


Apart from these two major plans, there are some more plans also being offered by LIC. One of such kind is a Child Career Plan. As the name suggests, it is specifically designed to meet the career plans of the child as well as other financial needs during the growing phase. The plan offers flexibility where the customer is free to choose sum assured, premium amount, policy term, mode of payment etc. 

You may like: Best Mutual Funds to Invest for child education

Who should opt this LIC child plan?


One side of the coin: Child insurance plans are relatively long term plans. The child plans are like ‘the sooner, the better’ for the future. They should be opted for as soon as the child is born or you come to know of becoming a parent. They can prove to be very handy at the times of need where there is no body to take care of the kids in the absence of bread-winner of the family. It helps to secure the future of the child as well as helping him in fulfilling his dreams.

Other side of the coin: Let me criticize for 120 seconds on these LIC child plans. These plans provide good protection for the child’s future, however at what cost? Are you willing to compromise your investment with 5% to 6% returns along with security for your child’s future? Are you okay with these traditional plans that provide lower returns than secured bank FDs?. If your answer is YES to these questions, you can proceed and consider these LIC Child Plans. If the answer is NO, you should look at investment options that can fetch higher returns like Mutual Funds, which are best investment options in India now.

If you enjoyed this article, share it with your friends and colleagues through Facebook and Twitter.

Suresh

Best LIC Child Plan in India for Low risk investors

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I love doing analysis on various Best Investment Plans like mutual funds, Stocks, IPO's, NCD Bonds, Insurance products. If you like our blog, you can share some of the good articles on your Facebook or Twitter. This would be the BIGGEST gift which you would be giving to us.

7 Comments

Add a Comment
  1. Plz suggest good policy for my kid educational purpose ..8 years 3 rd class male

    1. You can consider any of these LIC child policies if you are low risk taker

  2. Plz suggest good policy for my kid educational purpose ..

  3. Lic plan no 836 ki kya benifit hi

  4. Y not term insurance and ppf combination. Better returns and good sum assured?

    1. Hello Magalpandey, If you are regular reader of our blog, you would have seen my advice several times that instead of taking money back or endowment policies, you can take term plan and invest balance in FD/Fixed Income options or mutual funds. However, this article is for very conservative investors who still believe LIC is best.

      1. Dear Suresh

        As you said Term LIC is better than LIC Money back plans. Can you please Compare both best plan of Term Insurance and best plan of Money back or Endowment plan. And then will come to know how better this Term Insurance plan and we can opt for it Instead of LIC conventional plans.

Leave a Reply

Your email address will not be published. Required fields are marked *