Child Education Plans

Start Building Your Child's Education Fund Today

Education costs in India rise about 10% a year. Answer 4 easy questions and then pick a target to build towards. Get quotes, compare and decide with expert help.

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Your details are confirmed. A child plan adviser will call you shortly about building your target — and will work out a monthly amount that fits what you already save, before you decide anything.

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Why this matters: the date your child starts college does not move, and education costs rise about 10% a year while they wait. Every year you delay, the same degree costs more and you have less time to reach it. That is the whole case for starting now rather than next year.

6 things to get right before you commit
1
Insist on the waiver of premium benefit. This is the one feature that makes a child plan different from a mutual fund SIP, and the only real reason to buy one. If you die during the term, the insurer pays every remaining premium itself and the plan still pays out in full, on the original date. An SIP stops the day your income stops. Your family is left with whatever has built up so far. A child plan with waiver of premium delivers the full amount on schedule — which is exactly what a degree admission needs. If a plan does not include it, ask why.
2
The policy goes in your name, not your child's. You are the policyholder and the life assured; the child is the nominee. That is what makes the waiver work — the cover is on the earning parent. A policy written on a child's life protects nobody's income and defeats the purpose.
3
Match the payout date to the admission date. Fees are due the month term starts, not whenever the policy happens to mature. Ask for the maturity to land the year your child turns 18, and ask whether the plan can pay in instalments across the course years rather than one lump sum — a four-year degree bills four times.
4
Check the lock-in and what you get back if you stop. Most child plans lock in for five years and allow partial withdrawals only after that. Ask for the surrender value in years one to five in writing. Exiting early is where most of the loss hides, and a plan you cannot afford to keep is worse than a smaller one you can.
5
Keep an emergency fund separate. The most common reason a child plan gets surrendered early is a medical bill or a job gap, not a change of mind. Three to six months of expenses kept somewhere liquid is what stops you having to break the one thing you cannot easily rebuild.
6
Make sure you have your own term cover too. A child plan protects one goal. Term insurance protects everything else your family lives on — the rent, the loans, the daily costs. Most advisers would tell you to have term cover in place first, and a child plan alongside it, not instead of it.

One more thing: increase what you put aside by around 10% a year, in step with your salary and with education inflation. A plan that stays flat for eighteen years quietly falls further behind the very cost it was built to meet.

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Child Plan Guide

Child plans in India: what education will really cost, and how to fund it

A child plan is a long-term savings plan with life cover built in. You pay premiums while your child grows up; the plan pays out when they reach college age. The feature that separates it from an ordinary investment is the waiver of premium benefit: if the parent dies during the term, the insurer pays the remaining premiums and the plan still delivers the full amount on the original date. The education happens either way.

The reason any of this is urgent is education inflation. Costs in India rise roughly 10 to 12% a year, against general inflation of 5 to 6% — which means a course cost roughly doubles every seven years. The calculator at the top of this page uses 10%, the conservative end of that range.

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Why plan

The admission date cannot move. A child plan makes sure the money is there that year, whether or not you are.

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How to plan

Start from what the course will cost in the year they turn 18, not what it costs today. Then pick a target and build towards it.

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When to start

Now. The target stays where it is; the years you have left to reach it do not. Every year of delay costs more per month.

What will your child's education actually cost?

Parents plan against today's prices, and today's prices are not what they will pay. At 10% a year, a course costing ₹20 Lakh today costs roughly ₹35 Lakh in six years and about ₹1.11 Crore in eighteen. The table below shows the same five goals priced at the year each child turns 18.

What they study Cost today If your child is 5 If your child is a newborn
Graduation ₹8 Lakh ₹28 Lakh ₹44 Lakh
Engineering ₹20 Lakh ₹69 Lakh ₹1.11 Cr
MBA ₹25 Lakh ₹86 Lakh ₹1.39 Cr
MBBS ₹75 Lakh ₹2.59 Cr ₹4.17 Cr
Study abroad ₹1 Cr ₹3.45 Cr ₹5.56 Cr

Today's costs are mid-range all-in figures for the full course — tuition plus hostel and living — because that is what a family actually has to fund. Published figures vary widely by institution and city. Future costs assume 10% education inflation and are rounded to the nearest lakh. These are illustrations, not quotations.

Child plan or mutual fund SIP?

On returns alone, a long-running equity SIP will usually beat a child plan, and anyone who tells you otherwise is selling something. The honest comparison is not about returns.

It is about what happens if the earning parent dies in year four of an eighteen-year plan. The SIP stops. The family keeps whatever has accumulated — perhaps a tenth of the goal — and the education becomes a loan, a compromise, or someone else's favour. A child plan with waiver of premium continues without a rupee more being paid, and hands over the full amount on the original date.

You are buying certainty on a date that cannot move, and paying for it in returns. Many families do both: a child plan for the floor, an SIP on top for the upside. What almost nobody should do is buy a child plan instead of term insurance — see below.

Get your term cover in place first

A child plan protects one goal. If you are not there, your family still has rent or EMIs, daily costs, and years of living to fund — none of which a child plan touches. Term insurance is what covers that, and it costs a fraction of the same sum assured.

The sensible order is term cover for the household first, then a child plan for the education goal on top. A family that has bought a child plan and no term policy has protected the degree and left everything else uncovered.

Whose name, and what to ask for

The parent is the policyholder and the life assured; the child is the nominee. That is what makes the waiver of premium work, because the cover sits on the person earning the money. A policy written on a child's life protects no income at all.

Three things worth asking for by name: the waiver of premium benefit as standard, not an optional extra; a maturity date that matches the admission year; and the option to take the payout in instalments across the course rather than one lump sum, since a four-year degree bills four times.

Lock-in, surrender and the cost of stopping

Most child plans lock in for five years, and partial withdrawals are allowed only after that, often with conditions. Surrendering in the early years typically returns materially less than you paid in — this is where most of the loss in these products hides.

Ask for the surrender value in years one to five in writing before you sign, and pick a premium you are confident of paying for the whole term. A smaller plan you keep beats a larger one you break. Keeping three to six months of expenses in a separate emergency fund is what stops a medical bill or a job gap forcing you to break it.

Tax treatment

Premiums generally qualify for deduction under Section 80C, within the overall ₹1.5 lakh limit. The maturity or death benefit is generally exempt under Section 10(10D), subject to the premium-to-sum-assured conditions in force. Rules differ between the old and new tax regimes and change from year to year, so confirm the current position for your own situation. As with any insurance product, the tax break is a bonus — it is not a reason to pick one plan over another.

Frequently asked questions

How much will my child's education cost in 18 years?

Education costs in India rise roughly 10 to 12% a year, which doubles a cost about every seven years. A private engineering degree costing ₹20 lakh today works out to around ₹69 lakh by the time a five-year-old turns 18, and around ₹1.11 crore for a newborn. A private MBBS at ₹75 lakh today reaches about ₹2.59 crore in the same thirteen years.

What is a child plan and how is it different from a mutual fund SIP?

A child plan is a savings plan with life cover built in. The difference that matters is the waiver of premium benefit: if the parent dies during the term, the insurer pays all the remaining premiums itself and the plan still pays out in full on the original date. A mutual fund SIP stops the day the earner stops, leaving the family with only what has accumulated so far.

When should I start a child plan?

As early as possible. The target does not move, but the time available to reach it shrinks every year, so the same goal costs far more per month the longer you wait. Starting for a newborn gives you eighteen years of compounding; starting at ten gives you eight.

Should the child plan be in my name or my child's name?

The parent is the policyholder and the life assured, and the child is the nominee or beneficiary. That is what makes the waiver of premium work — the cover is on the earning parent, not on the child. A policy on a child's life provides no income protection for the family at all.

Can I withdraw money from a child plan before it matures?

Most child plans have a lock-in of five years and allow partial withdrawals only after that, often with conditions. Surrendering early usually means getting back materially less than you paid in. Treat the money as committed to the education date, and keep a separate emergency fund so you are never forced to break it.

What tax benefits does a child plan get?

Premiums generally qualify under Section 80C within the overall ₹1.5 lakh limit, and the maturity or death benefit is generally exempt under Section 10(10D) subject to the premium-to-sum-assured conditions in force. Rules differ between the old and new tax regimes and change from year to year, so confirm the current position before relying on it.

The information above is general educational content about child education planning in India and not personalised financial advice. The cost figures are illustrations based on mid-range published costs and an assumed 10% education inflation rate; actual costs vary widely by institution, course and city, and future costs cannot be known. Returns from market-linked products are not guaranteed. Policy terms, lock-in periods and surrender values vary by insurer. Tax treatment depends on your individual circumstances and on prevailing tax law. Please read the policy wording and all sales literature carefully before concluding a sale. RupeeMaster is a marketing and facilitation platform, not an insurer.