Child Insurance Plans

A child education plan helps parents save money for their child’s studies over a long time. It is an investment plan that provides the opportunity to invest in market-linked or guaranteed return assets and also features life cover benefit for additional financial protection of the child. The corpus created by the child education plan can be used to cover a wide range of education-related expenses such as, tuition fees, accommodation, travel, laptop, books, uniform, etc..

As per a HSBC survey published in 2024, the average cost of education in India has increased by 10-12% per annum over the last decade. Currently, the average cost of overseas education in 2025 is ₹1.2–1.5 crore, which is a substantial financial commitment. Therefore, you need to plan your finances in a way that by the time your child reaches the age to start his/her higher education, you have an adequately large corpus of funds in place to manage these educational expenses. In this context, a child insurance plan for education can be your go-to solution.

The life cover benefit comes into play if the parent dies during the policy term. In such a scenario the plan will provide a lump sum pay out as death benefit. Additionally, if you have purchased the optional waiver of premium rider, the child plan will continue with all its benefits intact without requiring additional payments. In effect, this rider waives off all future premiums if the policyholder passes away during the policy term of the child plan. This means the process of saving for the child’s education will not be affected even by the parent’s untimely demise.

Some plans also let you take out part of the money early or change the way you receive future payouts. You can also customise your investment strategy and choice of funds, depending on your risk tolerance and investment horizon. In various ways, child education plans allow you to plan for your child’s education needs in a disciplined and efficient manner over the long-term.

As per the HSBC report mentioned earlier, 78% of parents in India want their children to have an overseas education, but only 53% of them currently have a dedicated child education-oriented savings plan in place. The primary focus of a child insurance plan is to secure the financial future of the child against various eventualities. With an accumulated fund corpus over a period, you can use it for your child’s higher education, or you can utilise it for other important events like marriage.

Apart from the benefit of long-term savings, child plans also offer other key benefits to the policyholder and the plan beneficiary. These include:

• Option to get market-linked returns that can help savings keep pace with inflation in educational expenses
• Financial knowledge and regular monitoring is necessary to make informed investment decisions.
• Provide assured returns to save for child’s education expense, if a traditional plan is chosen
• Life cover benefit to secure the financial future of the child
• Source of emergency funds in the case of a medical emergency or other unplanned expenses.
• Option to customise the plan based on financial goals and risk appetite
• Disciplined long-term investment that leverages the benefit of compounding
• Opportunity to avail additional protection such as safeguarding against accidental death/dismemberment through purchase of optional add-ons or riders

The above list of child education plans is illustrative and there may be other advantages that make these plans suitable for the needs of parents from various walks of life.

An additional benefit of buying child education plans is tax benefits. You can claim up to ₹1.5 lakh in a fiscal year under Section 80C (if you opt for the old tax regime) for the premiums you pay. The actual tax benefit would depend on the total premiums paid during the applicable financial year.

On the other hand, the maturity pay out from this plan is tax-free as specified under Section 10(10D). The extent of this benefit is as follows:

• In the case of market-linked child ULIPs, the entire amount received from plan at maturity or as death benefit is tax-free provided the cumulative annual premium does not exceeded ₹2.5 lakh.
• In the case of traditional guaranteed return child plans, the maturity or death benefit payout is tax-free provided the cumulative annual premium does not exceed ₹5lakh.

This makes child education plans a beneficial investment for both parents and the child. You can use an income tax calculator to determine the tax benefits that you are eligible to avail from a child insurance plan during the fiscal year.

Education has become more and more expensive with time, so, higher education, especially professional courses, requires significant financial commitment from parents. According to a report published by HSBC in 2024, the average cost of education in India has increased by 10% to 12% per annum over the last decade. The study also found that Indian parents spend ₹12.25 lakh per child on average from primary to undergraduate level. Needless to say such a large sum can be ensured only with careful advance planning.

What’s more this trend of rising education costs is not limited to those pursuing higher education in India. The same HSBC report also found that studying abroad in 2025 can cost as much as ₹1.2–1.5 crore, depending on the destination. As per this report key reasons for rising cost of education overseas for Indian students is the reduction in federal grants to universities and colleges in countries such as the US as well as the weakening Indian rupee against major foreign currencies such as the US$, AUS$, GB£, etc.

In such a situation, many Indian parents opt for loans to fund their children’s education needs, however, this can be quite expensive considering the interest charged on different types of loans. Axis Max Life Insurance offers child education plans that help you save steadily and safely over time, so that you can minimise the debt required to fund your child’s higher education needs. These plans also feature in-built life insurance cover, flexible choice of pay out, and the option of availing waiver of premium benefit, which means your child’s financial needs with respect to education will stay on track even if you are not there to help out financially.

There are two main types of child education plans:

• Traditional Child Plans: These plans offer fixed returns. They don’t depend on stock market movements, so the returns from these plans are steady and safe. These are good for parents who have low risk tolerance and want guaranteed results that can help fund their child’s higher education.
• Unit-Linked Child Plans: These plans are ULIPs or unit linked insurance plans that combine the benefit of life insurance with the opportunity benefit from market-linked equity and/or debt instruments. Your money grows depending on how your investments perform. You can also switch between different funds based on your comfort with risk. In the case of such ULIPs, investment risk is borne by the policyholder. While returns are not guaranteed, these child plans offer the potential of generating inflation-beating long-term returns.

Axis Max Life Insurance offers various plans that help parents save for their child’s education. These plans combine life insurance with long-term savings and planned payouts to match important academic milestones. The flagship child plan currently offered by Axis Max Life Insurance is the:

• Online Savings Plan (Variant 2)
This is a child plan that combines multiple benefits such as – death benefit and auto policy continuation in the case of parent’s demise as well as capital appreciation during the policy term, into a single solution. Additionally, this child plan allows various customisations such as choosing the policy term and premium payment term and the option of unlimited free fund switches. Other benefits of this plan include nil policy administration and premium allocation charges as well as partial withdrawal benefit to deal with unexpected financial emergencies that might arise.

• Shiksha Plus Super Plan
This is a unit-linked non-participating individual life insurance plan. This child plan offers life cover along with the option to benefit from market-linked investment through various funds and investment strategies as per the policyholder’s risk appetite. Additionally, this plan also offers the flexibility of partial withdrawals, systematic fund transfer and dynamic fund allocation to the policyholder.

Beyond dedicated child plans, policyholders can also opt for various other traditional and ULIPs to start saving for long-term financial goals such as funding their child’s higher education. Some of these plans are:

• Flexi Wealth Advantage Plan
This is a unit-linked plan which means the returns are not guaranteed but depend on how the fund chosen by the policyholder performs. It gives options to switch between funds and is meant for parents comfortable with some risk and are seeking potentially inflation-beating long-term returns to fund their child’s higher education. This plan also features in-built life cover for additional protection as well as other benefits such as loyalty additions, auto debit boosters and return of charges, to name a few.

All these plans include the option of availing add-ons such as waiver of premium and offer the tax benefits on premium payments and maturity, as mentioned earlier. So, if something untoward happens to the parent, the benefits under the plan continue uninterrupted to ensure that your child still gets access to the funds they need to pursue their chosen field of study.

A child education plan works by combining two things: life insurance and savings that grow through accrued returns. You choose the number of years you will pay premiums and the individual premium payable and the premium payment frequency.

Every time you pay your premium, your money grows by a guaranteed amount (in fixed plans) or is invested in market-linked funds (in market-linked plans). Over the years, this money grows and forms a fund that you can use when your child reaches school or college.

Now, in the scenario when the policyholder i.e. the parent survives the policy term, maturity benefits of the fund are applicable. In case of traditional plans, the pay-out is the guaranteed maturity pay out as per the plan document. In the case of child ULIP plans, the maturity pay-out is determined based on how the market-linked investments have performed over the policy term.

On the other hand, in the case of the parent’s (policyholder’s) demise during the policy term, the child and policy beneficiaries would receive death benefits as per the policy documents. Additionally, depending on the add-ons chosen, the future premiums for the policy may be waived off and the child will still receive the maturity pay out at the end of the policy term. This would ensure that education funding requirements of the child covered by the plan are not impacted even if the parent is no more.

How much you should invest in a child education plan would depend on multiple factors such as the choice of higher education stream, the location whether domestic or overseas as well as how far in the future the money for higher education will be required depending on the current age of the child. Based on these factors, you should use a Child Education Cost Planning Calculator to estimate the future cost of higher education and start saving as early as possible. This will ensure you are well-placed to reach your goal of funding your child’s education.

For instance, suppose the cost of a B.Tech degree from a private college is ₹15 lakh today and your child is currently 10 years away from attending college in 2035. Now, assuming 10% inflation of education costs for the next 10 years, the cost of a B.Tech degree at the same college in 2035 would be ₹38.9 lakh. So, you should consider inflation over time as one of the key factors in determining how much your will need to invest to reach such a education fund corpus goal.

Buying a child insurance plan is easy. You can do it online or with the help of an advisor. Here are the simple steps:

1. Compare different plans based on your budget and child’s needs.
2. Use an education cost calculator to know how much you need to save.
3. Choose add-ons like waiver of premium and/or other riders depending on your unique protection needs.
4. Fill out the application form and complete the KYC process.

The Axis Max Life Insurance team can guide you at every step—from choosing the right plan to helping with paperwork to purchase a child plan suited to your unique needs.

You’ll need a few key documents to get started with a child education plan. These usually include

• Identity proof of the parent (like Aadhaar, PAN, or passport)
• Address proof (such as utility bills or Aadhaar)
• Income proof (salary slips, ITR, or bank statements)
• Child’s birth certificate
• Recent passport-sized photos

Note: The above list of documents required is illustrative, not exhaustive. Depending on internal policies, the insurer may ask for additional documents on a case by case basis.

Here are a few things to keep in mind before choosing a plan:

• Start early – The sooner you begin, the more your money can grow, and your monthly burden will be lower.
• Waiver of premium – Make sure the plan continues even if you’re not around.
• Payout options – Pick a plan that gives money when you need it most—like at the time of college admission or marriage.
• Investment choices – If you have sufficient risk appetite, go for market-linked plans.
Otherwise, choose fixed-return plans, which are more suitable for relatively conservative policyholders.
• Flexibility – Look for options like partial withdrawals and unlimited free fund switching, if available.
• Use calculators – They help set realistic goals based on your income and your child’s future education needs.

Axis Max Life Insurance offers child insurance plans that are highly customisable, and ideally suited to the creation of a sufficient corpus to cover the future education expenses of your child. These plans are designed to:

• Help you save a sufficient amount for your child’s education
• Let you switch between funds at no extra charge to help your benefit from changing market conditions
• Offer optional add-ons such as the waiver of premium rider so your child’s education stays on track even if you are unable to help financially
• Provide the choice between either guaranteed returns or market-linked growth, depending on your risk tolerance

Choosing the right plan depends on your goals and comfort level with risk. Here’s how to make the right choice:

• Decide how much money you need to save for your child’s higher education
• Choose between fixed-return and market-linked plans
• Choose a plan that offers benefits such as waiver of premium and other important features
• Match the policy term with your child’s current age and the expected time remaining till start of higher education
• Don’t just look at the premiums payable consider the benefits on offer too