A Mini Guide on Child’s Money Back Policy

Having a child is one of the most fulfilling experiences in life. But with it comes the financial responsibilities too. From providing a comfortable life to sponsoring their education and marriage, it’s not at all easy. That’s why, as a parent, you need to invest in a Child Money Back Plan.

Child Money Back Plan, also known as Money Back Plan, is a type of investment cum insurance instrument that provides survival benefit, death benefit, and bonus.

How Does Child Money Back Policy Work?

Child Money Back Plan is a life insurance instrument that offers guaranteed payouts to the insured child. The returns can be guaranteed, or performance-linked, both. A portion of the sum assured is paid out to the insured at certain intervals; this is known as survival benefit. In an event of the policyholder’s death, the assured sum is paid out to the nominee, hence, the death benefit.

For instance: You opt for a Child Money Back Plan with a maturity period of 15 years, and pay Rs, 5000 as a monthly premium against the sum assured, say, 10,00,000. Now after a period of five years, your child will start getting payouts after every 5th and 10th year. If the total payouts are 25% of the sum assured, i.e., 2,50,000, then the payout at the two intervals would be 1,25,000 INR, (depending on the ratio and interval of the plan). The remaining amount, 75%, 7,50,000 would be allocated upon maturity.

Features of Child Money Back Policy

Guaranteed Returns During and on Maturity

Child Money Back Plan is one of the safest investments plus life insurance instruments, given the fact that it offers guaranteed income upon maturity. While some portion of the guaranteed sum is paid out at intervals during the policy term, the rest is paid on maturity.

The Death Benefit

Child Money Back Plan also has a life insurance component. In the event of the untimely death of the policyholder, the assured gets the guaranteed amount, plus additional bonuses.

Add-on Riders

As the Money Back plan also serves as an insurance instrument, you can avail extra features, in form of riders, on top of your basic policy. These additional riders vary from company to company. But the basic riders include critical illness rider, accidental rider, and waiver of premium rider.

Tax Benefits

Premiums paid towards the Child Money Back plan are subject to tax benefits. Taxpayers can claim up to INR 1,50,000 as a tax deduction.


Knowing what is investment, it’s a given that it is coupled with returns. That said, a Child Money Back Plan also comes with returns and bonuses. The maturity amount doesn’t only include the assured amount, but the bonuses that are accumulated at the end of the term. Bonuses are calculated every year at a set percentage. The amount of the bonus depends on the sum assured.

Eligibility Criteria for Child Money Back Plan

Parents and grandparents can buy Child Money Back Plan for their children or grandchildren. There are as such no eligibility restrictions except for age. While entry age is not a point of concern, exit age can be a concern. Entry age and exit age depend on the insurance company.

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Why Should You Buy Child Money Back Plan?

To Secure your Child’s Life Financially

From education to marriage, there are many expenditures to take care of when you have children. A Child Money Back Plan can aid in paying for these expenses. A Child Money Back Plan aims to provide financial security for up to 25 years.

To Aid Financial Goals

Child Money Back Plan provides survival benefits if the policyholder survives the term. This survival benefit includes the remaining amount of the sum assured on maturity and accumulated bonuses. The fund can be used to aid your family’s short-term financial goals.

To Save Tax

Child Money Back Plan acts as an insurance instrument so you can save tax on it. The premium paid towards Child Money Back Plan is tax-deductible. In other words, you can deduct the annual premium amount (up to the limit of INR 1,50,000) while computing taxable income.

The Final Word

Child Money Back Plan is one of the best investments cum insurance instruments you can buy if your objective is to provide financial security to your children. However, before making a purchase, know your financial expectations and goals.

At the same time, know your children’s requirements. Additionally, it’s essential to choose a suitable plan from a reliable insurance company. You have to be aware of the benefits, rights, and duties before and after you purchase a policy. 

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