5 Best Investment Plans For Children

There are many investment plans for kids and young ones. It is important for parents to begin investing early by securing the future of their child. Most investment plans offer insurance and returns, including the Unit Linked Insurance Plans or popularly called as ULIPs. As education costs mount and so do things like marriage costs, it is extremely important to save for the children's future. Here are 5 best investment plans for Children:

1. Reliance Nippon Child Insurance Plan

In this plan let's assume two scenarios: Let's say Ajay, who is 35 years of age, opts for a 16-year plan. If he survives, he gets guaranteed periodic benefits on each of the last 3 year anniversaries before maturity. At maturity, he receives sum assured, plus bonuses.

In case of Ajay's death, his nominee receives a lumpsum amount as death benefit, as all premiums are waived off and policy benefits will continue.

It is important to remember that child investment plans, tend to offer the nominee benefits on death, but, the returns tend to be low, if you survive.

2. Aditya Birla Sun Life Bal Bhavishya Yojana

This is a good scheme for those parents, who are looking at long-term investment. There is a lock in period under the scheme for a period of 5 years or until the child attains majority.

The Aditya Birla Sun Life Bal Bhavishya Yojana looks for long term capital appreciation and the funds are invested in both equity and debt.

The investment can be done at the net asset value, which was placed at Rs 10.80. Those looking at decent returns over the long term can invest in the scheme.

The minimum investment under the scheme is a small sum of Rs 1,000.

3. SBI Life Smart Scholar

This again is a Unit Linked Insurance Plan, which can provide reasonable returns for the education of a child. In case, any eventuality happens to the parent, the premium are waived off, thus providing some insurance shield.

An investor can also switch between funds, to maximize his own returns. It's important to note that all Unit Linked Insurance Plans have a lock-in period of 5 years, and hence it's not too liquid.

An investor has a choice of moving from liquid funds to debt funds to money market funds. The returns qualify for tax exemption and the amount of premium paid qualifies for tax rebate under SEC80C.

4. HDFC Life YoungStar Udaan - Child Plan

The good thing about the HDFC Life YoungStar Udaan - Child Plan is the maturity benefits. For example, if you decide on a lumpsum payout, you can opt for the same. On the other hand, if you feel that you would need it in the last 5 -years to meet the education expenses, you can also opt for the same.

You can also opt for the last guaranteed payout, which is higher than the previous guaranteed payout. The basic death benefit under the plan shall be the higher of:

Sum Assured on Death

105 per cent of Premiums paid

The Sum Assured on Death shall be the higher of:

Sum Assured on Maturity

10 times Annualised Premium for entry age up to 50 years and 7 times Annualised Premium for entry age greater than 50 years

5. ICICI Pru Future Perfect

ICICI Pru Future Perfect for a child, like all ULIP plans provides an insurance plus savings plan, which offers guaranteed benefits along with bonus, so that parents can get better returns on their savings and secure the child's by providing financial protection through life cover.

It's extremely important to remember that in the case of ULIPs that you get an insurance amount in case of death and also tax benefits.

The returns would be tax free under Sec 10DD, while the amount of premiums paid qualifies for tax exemption under Sec80C of the Income Tax Act.