Sukanya Samriddhi Yojana vs. Child Insurance Plans: A Detailed Comparison for Your Daughter’s Financial Security in India

Looking for the best financial security plan for your daughter in India? This article provides a detailed comparison between Sukanya Samriddhi Yojana and Child Insurance Plans.

As parents, one of the most important tasks we have is to ensure our daughter’s financial security. And, while there are many investment instruments available in India, Sukanya Samriddhi Yojana (SSY) and Child Insurance Plans (CIP) are two of the most popular options. In this article, we will take a detailed look at both these options and help you understand which one could be the right choice for your child.

Understanding Sukanya Samriddhi Yojana and Child Insurance Plans

What is Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana is a savings scheme launched by the Indian Government to help parents of girl children save for their future education and marriage expenses. It is a long-term investment scheme, which can only be opened for a girl child who is below the age of 10 years.

The scheme offers a high-interest rate of 7.6% per annum, which is compounded annually. This makes it an attractive investment option for parents who want to ensure their daughter’s financial security in the long run. The minimum investment amount is Rs. 250, and the maximum investment amount is Rs. 1.5 lakhs per year. The account can be opened in any post office or authorized banks.

One of the biggest advantages of this scheme is that it offers tax benefits under Section 80C of the Income Tax Act. The interest earned and the maturity amount are also tax-free.

Another benefit of this scheme is that it can be transferred from one post office or bank to another, making it a flexible investment option for parents who may need to relocate.

What are Child Insurance Plans?

Child Insurance Plans are life insurance policies that are designed to provide financial security to a child in case of a parent’s unforeseen death or critical illness. These policies can also act as a savings plan for the child’s future needs like education, marriage, and more.

These plans offer a lump sum payment to the child in case of the parent’s death or critical illness. The premium paid towards these policies is invested in different financial instruments, which can help the policy grow over time. The maturity amount can be used to meet the child’s future financial needs.

Child Insurance Plans come in different variants like traditional plans, unit-linked plans, and more. Traditional plans offer a guaranteed return, whereas unit-linked plans offer market-linked returns. Parents can choose the plan based on their risk appetite and financial goals.

One of the biggest advantages of Child Insurance Plans is that they offer tax benefits under Section 80C and Section 10(10D) of the Income Tax Act. The premium paid and the maturity amount received are tax-free.

It is important for parents to choose the right plan based on their financial goals and risk appetite. They should also ensure that they have adequate life insurance coverage to provide for their child’s future needs in case of an unfortunate event.

Key Features of Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme that aims to provide financial security to girl children in India. The scheme was launched in 2015 as a part of the ‘Beti Bachao Beti Padhao’ campaign and has since then gained immense popularity among parents and guardians.

Eligibility Criteria

As stated earlier, SSY can only be opened for a girl child who is younger than 10 years of age. This means that parents and guardians need to start planning for their daughter’s future at an early age. The account can be opened in any post office or authorised bank branch across India. Additionally, the parent/guardian should be a resident of India, and only one account can be opened per child.

It is important to note that the account will be operative for 21 years from the date of opening or until the girl child gets married, whichever is earlier. In case the account is not closed after maturity, the balance will continue to earn interest as per the prevailing rates.

Investment Tenure and Maturity

The investment tenure for the SSY scheme is 21 years, or until the girl child gets married, whichever is earlier. This means that parents and guardians have a long-term investment horizon and can plan their finances accordingly. The minimum deposit amount is INR 250, while the maximum deposit limit is INR 1.5 lakh per annum. This allows parents and guardians to invest as per their financial capacity and goals.

When the account matures after 21 years, the girl child will receive the entire corpus along with the interest earned. The maturity amount is tax-free, which means that the entire amount can be used for the girl child’s education, marriage, or any other financial need.

Tax Benefits

SSY deposits are eligible for a tax deduction under Section 80C of the Income Tax Act, 1961. This means that parents and guardians can claim a deduction of up to INR 1.5 lakh from their taxable income by investing in SSY. The interest earned and the maturity amount are also tax-free, which makes SSY one of the most tax-efficient investment options for girl children in India.

Interest Rates and Returns

The current interest rate on SSY deposits is 7.6% per annum (as on January 2021). This is higher than the interest rates offered by most other savings schemes in India. The returns are compounded annually and credited to the account. This means that parents and guardians can expect a significant corpus at the end of the investment tenure. The account balance can be checked online, and interest rates are subject to change as per government notifications.

Overall, Sukanya Samriddhi Yojana is a great savings scheme for parents and guardians who want to secure their daughter’s future. The scheme offers a high rate of interest, tax benefits, and a long-term investment horizon. By investing in SSY, parents and guardians can ensure that their daughter’s financial needs are met, and she can pursue her dreams without any financial constraints.

Key Features of Child Insurance Plans

Child Insurance Plans are specifically designed to provide financial security and support for your child’s future. These plans offer a wide range of benefits and features that can help you secure your child’s future in the best possible way. Let’s take a closer look at some of the key features of Child Insurance Plans:

Types of Child Insurance Plans

Child Insurance Plans can be broadly classified into two categories: traditional plans and unit-linked insurance plans (ULIPs). Traditional plans offer guaranteed returns, while ULIPs are market-linked and offer higher returns at a slightly higher risk. Traditional plans are ideal for risk-averse investors who prefer a fixed return on their investment, while ULIPs are suitable for investors who are willing to take some risk in exchange for potentially higher returns.

Traditional plans typically invest in low-risk debt instruments such as government securities, bonds, and fixed deposits, while ULIPs invest in a mix of equity and debt instruments. ULIPs offer the flexibility to switch between different funds based on market conditions and your risk appetite.

Premium Payment Options

Child Insurance Plans offer flexible premium payment options, such as monthly, quarterly, half-yearly, or yearly. The premium amount is determined based on the policyholder’s age, health condition, and the sum assured. You can choose a premium payment option that suits your financial goals and cash flow requirements.

Moreover, some Child Insurance Plans offer the option of paying a single premium upfront, which can be beneficial for investors who prefer a one-time investment. This option also ensures that the policy remains in force for the entire policy term, regardless of your premium payment frequency.

Riders and Additional Benefits

Child Insurance Plans offer various riders and additional benefits that can be added to the base policy by paying an additional premium. These riders can enhance the coverage of your policy and provide additional financial protection for your child. Some of the popular riders and additional benefits offered by Child Insurance Plans include:

  • Accidental death benefit
  • Premium waiver benefit
  • Critical illness cover
  • Income benefit rider
  • Term rider

These riders can be added to your policy based on your specific needs and requirements. For instance, the accidental death benefit rider provides an additional payout in case of the policyholder’s accidental death, while the premium waiver benefit rider waives off the future premiums in case of the policyholder’s death or disability.

Tax Benefits and Returns

Child Insurance Plans premiums are eligible for a tax deduction under Section 80C of the Income Tax Act, 1961, up to a maximum limit of Rs. 1.5 lakhs per annum. Moreover, the maturity amount is also tax-free under Section 10(10D) of the Income Tax Act, 1961. This makes Child Insurance Plans an attractive investment option for investors who are looking for tax benefits.

Returns on ULIPs and traditional plans vary based on the policy’s duration, the sum assured, and the premium amount. ULIPs offer potentially higher returns than traditional plans, but they also carry a higher risk. Traditional plans, on the other hand, offer a fixed return on your investment, but the returns may be lower than ULIPs.

It is important to choose a Child Insurance Plan that aligns with your financial goals, risk appetite, and investment horizon. You should also compare the features, benefits, and costs of different plans before making a decision. With the right Child Insurance Plan, you can secure your child’s future and provide them with the financial support they need to achieve their dreams.

Comparing Sukanya Samriddhi Yojana and Child Insurance Plans

Investment Goals and Objectives

While both SSY and CIPs offer financial security, they differ in their investment goals and objectives. SSY is specifically designed for long-term savings for a girl child’s education and marriage expenses. On the other hand, CIPs offer a combination of life insurance and savings that can be used for various financial goals, including the child’s education and marriage expenses.

Flexibility and Control

SSY offers limited flexibility and control over the investment amount and investment tenure. The account can only be opened for a girl child younger than 10 years, and the maximum deposit is capped at INR 1.5 lakh per annum. On the other hand, CIPs offer more flexibility and control over the investment amount, premium payment frequency, and investment tenure.

Risk and Return Profile

SSY is a risk-free investment that offers a stable return of 7.6% per annum, while CIPs offer varying returns based on the policy duration, the sum assured, the premium amount, and the investment portfolio’s performance. ULIPs offer higher returns at higher risk, while traditional plans offer guaranteed returns but lesser returns compared to ULIPs.

Tax Implications

Both SSY and CIPs offer tax benefits, such as tax-deductible premiums and tax-free maturity amounts. However, the tax benefits may vary based on the tax laws and regulations that are in effect during the investment tenure.


Both Sukanya Samriddhi Yojana and Child Insurance Plans are excellent investment options for your daughter’s financial security. However, the investment objective, flexibility, risk profile, and tax implications may vary depending on the individual’s specific financial needs and goals. It is recommended to consult with a financial advisor and do your research before deciding which option is right for you.



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