Planning for a child with LIC
A child plan exists to make sure a specific future expense gets paid — usually education, sometimes marriage — whether or not the parent is alive to pay for it. That second half is the whole point, and it is the part most often overlooked at the counter.
Structurally these are savings plans with the payout timed to when the child needs money, often released in instalments across several years rather than as one lump sum. The child is frequently the life assured, with the parent as proposer, which has consequences worth understanding before you sign.
The clause that matters most
Ask what happens to the policy if the parent paying the premiums dies. In a plan with a premium waiver benefit, the remaining premiums are waived, the policy stays in force, and the child receives the full benefit at the intended date. Without that benefit, someone has to keep paying, and a family that has just lost an earner often cannot.
A child plan without a premium waiver is a savings plan with a child’s name on it. With one, it is a plan that keeps its promise in the exact circumstance you bought it for. On LIC’s range this is generally an optional rider, so it is a question to ask, not an assumption to make.
Timing the payout to the need
Money-back structures suit education well, because tuition arrives annually rather than once. A plan paying at fixed intervals from the child’s late teens matches that pattern better than a single maturity lump sum arriving a year late.
Work backwards from the year the fee is actually due, then check the plan’s policy term against it. A two-year mismatch is easy to create and expensive to fix.
Sizing it against inflation
Education costs have historically risen faster than general inflation, so a corpus sized on today’s fees will fall short. Decide the target in today’s money, inflate it to the year you need it, then work out the premium — the goal corpus calculation on this site does that in that order and shows the inflation rate it used.
LIC's children's plans
LIC files these under endowment and money-back rather than as a separate category — they are listed here because they are built and sold for a child’s future expenses.
Work out your numbers
Each of these shows the formula it used and the assumptions it made, so you can check the result rather than trust it.
Goal planner
Work out what a future goal will cost after inflation, and what you would need to set aside each month to get there.
Open calculator →Inflation impact
See what today's money is likely to be worth in future, and what a cost today will grow to.
Open calculator →Monthly savings projection
See what a fixed monthly amount could grow to over time at a return rate you choose.
Open calculator →How much life cover do you need
Estimate the life cover required to replace your income and clear your liabilities, using the income-replacement method.
Open calculator →Common questions
- What happens to a child plan if the parent dies?
- It depends entirely on whether a premium waiver benefit is attached. With one, remaining premiums are waived and the policy continues to pay the child as intended. Without one, the premiums remain payable by the family, and the policy lapses if they are not paid. Check this before buying — on LIC’s range it is generally an optional rider.
- Should the child or the parent be the life assured?
- The risk you are insuring against is the earning parent dying, so the parent’s life is what needs cover. Many child plans instead assure the child’s life, with the parent’s risk handled through a premium waiver rider. That works, but only if the rider is actually attached — which is why the question above matters.
- Is a child plan better than investing the same amount separately?
- Purely on expected return over fifteen years, a diversified investment has usually done better. What a child plan adds is that the goal still gets funded if the parent dies, which an investment plan does not do. Compare them on that basis rather than on returns alone, and consider whether term cover plus separate investing gives you both at lower cost.
Go deeper
What happens if I stop paying my premiums?
The answer depends almost entirely on how many years you have already paid. Stopping early and stopping late have very different consequences.
Read the answer →What exactly does my family get if I die?
It is usually not simply "the sum assured". Here is how the death benefit is actually built up.
Read the answer →Still deciding?
You can work through all of this yourself — that is what the calculators and plan pages are for. If you would rather talk it through with someone who does this for a living, that is available too.