SSY or Children Insurance Plan, which option is better to secure the future of the child?

Apart from education, marriage, home, etc. are some other financial goals, which require the right planning and investment. It is very important to start saving early and invest money at the right place for a secure future for the children.

It is very important to start saving early and invest money in the right place for the future of the child.

Providing good education to the children is the first priority of the parents. in the field of education Inflation The high rate adds to the concern. Parents need to keep a fund ready to ensure that their children do not miss a golden opportunity due to paucity of money. Apart from education, marriage, housing, etc. are some other financial goals, which also require proper planning and investment. It is also important to ensure financial security to fulfill the dreams to ensure that the goals are achieved even in case of the unfortunate premature death of the earning parent. To secure your child’s future Sukanya Samriddhi Yojana (Sukanya Samriddhi Yojana- SSY, or Child Insurance Plans You can choose to invest in According to the child’s higher education or marriage, such an investment option should be chosen, so that you do not face any problem in redeeming the investment.

Sukanya Samriddhi Yojana

The parents or legal guardian of the girl child can open the Sukanya Samriddhi Yojana account till the girl child attains the age of 10 years. SSY with Sovereign Guarantee is completely risk free and offers higher interest rates than the rate offered on Public Provident Fund (PPF).

The maturity period of SSY is 21 years and deposits are to be made for 15 years. Partial withdrawal of 50% of the balance amount of the outstanding account is allowed on the girl child turning 18, which can be used for education purposes.

This maturity period is 21 years. An SSY account can be closed prematurely and the entire remaining amount can be withdrawn after the beneficiary girl child gets married after attaining the age of 18 years. Investments in SSY accounts are tax exempt under section 80C, while the interest and maturity amount are completely tax free.

SSY accounts can be opened only for girls. Therefore, parents should choose other avenues of investment for boys. The maturity amount can be reduced in case of reduction in rates with interest rate revised quarterly. In case of death of one earning parent, the investment in SSY will stop, thereby derailing the goals of the beneficiary girl child.

Child Insurance Plans-

Like SSY, the purpose of child insurance plan is also to meet the financial needs of children for higher education, marriage etc. Child insurance plans usually come with the option of Premium Waiver Benefit (PWB), which ensures that the policy continues without paying premiums in case of death of the earning parent.

Such an insurance scheme can be taken for both girls and boys. Parents have the option to choose the maturity period and in some cases money back mode and tenure as well. Like SSY, investment in child insurance plan also gets tax benefits under section 80C and maturity and money back are also tax free.

With the low bonus rate the parents need to opt for Higher Sum Assured to meet the financial needs, leading to higher premiums.

Which option is better?

financial express According to the report, SSY is a good risk free investment option for girls with sovereign guarantee, attractive return rate and full tax exemption. However, investment in SSY can stop in case of accidental death of the earning parent. Therefore it is also necessary to take insurance cover.

However, instead of a relatively expensive child insurance plan, parents can opt for affordable term insurance and invest the remaining amount in mutual funds or other investment options to give better returns.

Also read- Standard Chartered introduced Interest only Home Loan scheme, facility to pay interest only