In Unit-linked plans, the investment risk in the investment portfolio is borne by the policyholder

As a parent, you want to provide the best future for your children. This can be quite a demanding task with the rising inflation and changing lifestyle. Most items and objects that are associated with your daily life have continued to become more and more expensive over the years including housing, fuel, clothing and common foods like pulses, vegetables and eggs.

The rising cost of inflation may make it very tough for the coming generations to manage the varied demands of their lifestyles. However, you have the opportunity right now to work towards making it easier for your children in the future. By planning in advance and investing your money smartly, you can indeed secure your children’s future and help them fulfil their dreams.

Why is it important to save for your children?

Saving for your children can make a big difference in their lives. Most importantly, the rising costs due to inflation can be beaten with the right planning. Furthermore, a corpus can protect your children from any financial disasters in case of an emergency.

Ultimately, by saving for your children now, you will be helping them in almost all important periods of their lives. From the quality of education that they receive to becoming independent and starting something of their own, saving for your children provides them with a solid foundation that boosts their confidence. The money that you save for them acts as a safety blanket and helps them start their adult lives in the best manner possible.

How do children savings plan work?

Saving plans for children offer you two main benefits. These plans help you save money for your children’s future needs and also help protect them financially in case of an unfortunate event. Here is an example to show you how these plans work:

Sachin bought a children savings plan and invested regularly to save for his daughter’s college education. At the end of the policy term, Sachin can use the maturity amount to pay for her further studies. In case something unfortunate happens to Sachin during the policy term, the claim amount will help to ensure that his daughter can continue with her education and fulfil her dreams.

Key benefits of children savings plans

There are several benefits of children savings plans, such as:

  • The dual advantage of savings and life cover1: These plans offer the dual benefit of savings and life insurance. They help you save for your children’s future and, at the same time, ensure their financial security in case of an unfortunate event
  • Emergency funds: These plans can be used in case of a financial emergency. They let you make partial withdrawals that you can use for any immediate needs
  • Financial security: In case of an unfortunate event, savings plans for children provide a lump sum payment in the form of the claim amount. Additionally, the plan continues to be active and the life insurance company takes care of all future premium payments. The payout received at the end of the policy term ensures that your children’s dreams are fulfilled, no matter what
  • Tax* benefits: These plans also offer tax benefits on the premiums paid up to ₹ 1.5 lakh in a financial year under Section 80C. The payout received at the end of the policy term is also tax-exempt* under Section 10(10D) of the Income Tax Act, 1961

The right time to start saving for your children

The right time to start saving is now as the benefits of starting to save early are manifold. The sooner you start saving, the more you can provide for your children eventually. Time is your greatest ally, and even if you save small amounts now, they will automatically accumulate into a large corpus over time. The returns that will be generated on any investment that you make now may increase in the long run – that’s the power of compounding and you need to take full advantage of it. It is a prudent decision to start saving for your children as soon as possible. In this way, you can ensure that every financial aspect of their lives is accounted for. However, it is never too late to start saving. Even if you start saving in your children’s formative years (1-8 years), you can accumulate enough money to help them once they grow older and their expenses increase.

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Key milestones you need to plan for

There will be many important milestones in your children’s lives that you need to plan and save for. These include:

  • School Education: School fees are a major expense that one needs to account for. Although the fees of top schools can often be quite expensive, it is every parent’s top priority to get their children admitted to the best. Ultimately, good schooling is instrumental in preparing your children for a successful future. So, you must invest in it as much as you can.
  • Higher Education: Higher education can be quite expensive in our country#. Specialist courses like engineering and medical science often have higher fees. Moreover, many children nowadays are choosing more off-beat career options like music or other performance arts.
    Since this is a relatively new trend in India, there aren’t many colleges that can match the expertise and infrastructure provided by colleges abroad. If your children decide to opt for such a course, you may have to send them overseas for further education sooner or later. As a parent, you need to support your children’s choices and passions, and having a financial plan will enable you to do just that.
  • Marriage: Marriage is one of the most important milestones in a person’s life. Your children might decide to get married early in life when they have just started their careers. At this stage, they might require your assistance in taking care of their marriage expenses. Even if they decide to get married at a later stage, every parent wishes to support their children emotionally and financially as they start a new chapter of their life. Ultimately, a child’s marriage is a very special occasion for any parent and you want to celebrate it in the best possible way without sparing any expenses or making any compromises. That is why it is important to plan and save for your children’s marriage.

Savings options for your children

There are a plethora of options available to help you save for your children’s future. Choosing the right option from all the available ones depends on the kind of corpus you are trying to build and the amount of money you can commit to putting away regularly towards it.-
For instance, if you want your children to have ready finances available to them when they become adults, you can set up a fixed deposit account for them. On the other hand, if you want to save specifically for their education, an education plan is what you should opt for.

Here are some options worth considering:

  • Term insurance plan: A term insurance plan is a very common insurance policy used by people to secure their children’s future. In the event of your unfortunate demise, your children receive a lump sum amount to help with their future expenses like education costs and more.
  • Savings plans: You can invest in an insurance policy for your child that offers life insurance along with a savings plan. For instance, ICICI Pru Guaranteed Income for Tomorrow is an insurance policy that helps you secure your children’s future by offering financial protection through guaranteed savings` as well as life cover1.
  • ULIPs: Investing in a ULIP is a smart investment decision you can make for your children because it secures their financial future and at the same time your money may keep growing. The ICICI Pru Smart Life is one such investment plan that lets you choose from 13 funds as per your children’s specific needs. It also provides rewards^ for staying invested for a long duration and gives you an option to withdraw money when you need it+. These features can help you to be financially prepared for your children’s various education goals and provide life cover1 to your loved ones.

Tips to save money for your children’s future

  • Start early: The sooner you begin, the more you can save. A longer term helps to earn better returns. Starting early also means that you can save smaller amounts regularly, which also makes it easier on your pocket
  • Be regular: Always deposit amounts as and when you can, instead of waiting until you have a large amount. Saving regularly also helps you to accumulate money that can support your children’s dreams
  • Look for added benefits: When opting for a life insurance plan, look for a plan that offers added benefits, in the form of bonuses. This will enhance your overall earnings
  • Don’t exceed your budget: The amount that you decide to save for your children should fit comfortably within your budget. If you exceed your budget, you might either end up compromising on your present needs, or find it difficult to keep saving regularly

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1. What are the documents required to purchase a savings plan for children?

Below are the documents required to purchase a savings plan for children. Please note that additional documents may also be required at the time of the purchase of the plan as per the norms.

If the plan is being purchased with the child as the insured person:

  • A duly filled application form with personal information of the child and the parent/legal guardian
  • KYC documents of the parent/legal guardian, such as PAN card, Aadhaar card, passport, and other such documents. Using these documents, the insurance company will verify the address and identity of the parent/guardian
  • Officially valid documents are accepted as KYC
  • Passport-sized photographs of the child and the parent/legal guardian
  • A proof-of-age document of the child

If the plan is being purchased with the child as the nominee:

  • A duly filled application form with personal information of the child and the parent/legal guardian
  • KYC documents of the parent/legal guardian, such as PAN card, Aadhaar card, passport, and other such documents. Using these documents, the insurance company will verify the address and identity of the parent/guardian
  • Officially valid documents are accepted as KYC
  • Passport-sized photographs of the parent/legal guardian
  • A proof-of-age document of the parent/legal guardian

2. What are the eligibility criteria to purchase a savings plan for children?

Here are the eligibility criteria to purchase a savings plan for children:

If the plan is being purchased with the child as the insured person:

  • The child must be a citizen of India
  • Minimum and maximum age limits at entry are as follows:
    • ICICI Pru Signature ULIP for Child has a starting age of 0 years to a maximum of 60 years
    • ICICI Pru Guaranteed Income for Tomorrow, a guaranteed returns plan, has a starting age of 0 years to a maximum of 60 years
    • ICICI Pru Smart Life plan has a starting age of 20 years to a maximum of 54^ years

If the plan is being purchased with the child as the nominee:

  • The parent/legal guardian must be a citizen of India to buy the plan
  • Minimum and maximum age limits at entry are as follows:
    • ICICI Pru Signature for Child has a starting age from 0 years to a maximum of 60 years
    • Similarly, ICICI Pru Guaranteed Income for Tomorrow, a guaranteed return plan has a starting age from 0 years
    • ICICI Pru Smart Life plan has a starting age from 20 years to a maximum of 54^ years

3. Do children savings plans offer partial withdrawal?

Yes, partial withdrawals+ can be made from the plan depending on the options chosen while buying the plan. For instance, the ICICI Pru Signature Plan and the ICICI Pru Smart Life Plan give easy access to money in case of an unforeseen financial circumstance during the policy term. Up to 20% of the fund value, in a policy year, can be withdrawn any time after the completion of five policy years. These partial withdrawals+ can be made free of cost with no penalty. They also do not impact the Sum Assured amount. Hence, even if a partial withdrawal has been made previously, the child stays financially protected in case of an unfortunate event and receives the entire Sum Assured promised a the time of purchase.

4. Is it possible to take loans on a savings plan for children?

Yes, there is a loan facility available on selected products. Please refer to the product brochure for more details.

5. Can a minor be chosen as a nominee in a savings plan for children?

Yes, a minor can be appointed as the nominee in a savings plan for children. However, in this case, an appointee will also be needed. An appointee is someone above the age of 18 who can be given the responsibility of managing the money received from the plan. In case of an unfortunate event, the appointee will take care of the money until the child turns 18. After the child is legally an adult, the money will be passed on to the child which can then be used to cover expenses such as higher education costs, wedding expenses, purchase of a house, and more.

6. What is the minimum instalment amount for a child savings plan?

The premium amount for a child savings plan depends on the insured person’s age, health condition and the amount of life cover1 chosen. With ICICI Pru Smart Kid plan, while there is no upper limit on the premium amount, the minimum* premium amount will be as follows:

  • If the age at entry is 20-49 years, the minimum premium amount per year would be ₹ 45,000
  • If the age at entry is 50-52 years, the minimum premium amount per year would be ₹ 1,20,000
  • If the age at entry is 53-54 years, the minimum premium amount per year would be ₹ 5,00,000

 

This plan offers 3 premium payment options - One Pay option (payment of premium once), Limited Pay option (payment of premium for limited years) and the Regular Pay option (regular payment of premiums throughout the policy term). In case of the regular pay and limited pay options, the premium can be paid in monthly, half-yearly or yearly instalments as per convenience.

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+Provided monies are not in DP Fund. You can make an unlimited number of partial withdrawals as long as the total amount of partial withdrawals in a year does not exceed 20% of the Fund Value in a policy year. DP Funds refer to the Discontinued Policy Funds and consist of money from the lapsed policy.

^ Applicable for One pay and Regular pay options.

` Guaranteed benefits in the form of lump sum will be payable under Lump Sum Plan option. Guaranteed benefits in the form of regular income will be payable under Income Plan option and Early Income Plan option.

* Applicable for Regular pay option

1 Life Cover is the benefit payable on the death of the life assured during the policy term

ICICI Pru Signature Online UIN 105L177V03

ICICI Pru Guaranteed Income For Tomorrow UIN 105N182V04

ICICI Pru Smart Kid Plan with ICICI Pru Smart Life UIN 105L145V06

W/II/3674/2021-22

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