Child Insurance Plan Calculator
Calculate required premium for a child ULIP targeting college/wedding corpus and compare with a direct equity SIP alternative.
Plan Inputs
Required Corpus
Inflated Goal at Maturity
₹94.94 L
14 years from today at 10% education inflation
ULIP Annual Premium
₹3,64,875
ULIP Maturity
₹94.94 L
SIP Alternative
₹21,754/mo
SIP Maturity (same outlay)
₹1.33 Cr
ULIP vs Plain SIP
SIP wins by ₹37.76 L over 14 years
At the same annual outlay, a plain equity SIP beats a child ULIP by 2-3% after charges.
Child ULIPs carry 1.5-2.5% in annual charges (fund management, policy admin, mortality) that eat into returns. A direct mutual fund SIP in a Nifty 50 / flexi-cap fund has expense ratios of 0.2-0.6%.
Better alternative:buy ₹1 crore term insurance (~₹10,000/yr) + direct equity MF SIP for the child's goal. You get better life cover AND better returns than any child ULIP bundled product.
What a child insurance plan actually is
A child insurance plan is either a child ULIP (insurance + investment) or a traditional money-back / endowment plandesigned to fund a future goal — education at 18 or 21, or wedding at 25. The parent is the life insured; the child is the nominee. On parent's death, the policy typically continues with future premiums waived and pays the corpus on maturity.
The planning math
Education in top Indian private colleges costs ₹15-25 lakh for undergrad, ₹25-40 lakh for MBA/MS. Abroad (US/UK) it's ₹80 lakh to ₹1.5 crore. Education inflation in India runs at 10-12% per year — so a ₹25 lakh corpus needed today becomes ₹94 lakh in 14 years.
ULIP charges that erode returns
- Premium allocation charge: 1-5% in early years
- Fund management charge: 1.35% annually (capped by IRDAI)
- Policy administration charge: ₹50-500/month
- Mortality charge: rises sharply with parent's age
- Partial withdrawal + fund switch fees
Effective drag on returns: 1.5-2.5% annually over 10-15 years.
The better alternative — term + SIP
Separate protection from investment. Buy a ₹1-2 crore term insurance plan (~₹10-15k/yr at 30) with your spouse / child as nominee. Simultaneously run a direct equity SIP in a flexi-cap or Nifty 50 index fund for the exact goal corpus. This combo typically gives a 25-40% higher maturity value than a bundled child ULIP for the same outlay.
When a child ULIP does make sense
- Parents who cannot commit to disciplined SIPs without a "forced saving" structure
- Want premium waiver benefit + goal lock-in combined
- Need Section 80C deduction (old regime) and can't exhaust it otherwise
Section 80C + 10(10D)
Child ULIP premiums qualify for 80C deduction up to ₹1.5 lakh/year (old regime). Maturity proceeds are tax-free under Section 10(10D) provided premium ≤10% of sum assured in all years. Budget 2023 introduced a ₹2.5 lakh cap on ULIP premium for tax-free maturity — for premiums above ₹2.5L/year (issued after Feb 2021), gains are taxed as capital gains.
Common questions about Child Insurance
Do I really need a dedicated child insurance plan?+
Usually no. Child plans bundle insurance + investment, with 1.5-2.5% in annual charges that eat into returns. The better approach: buy a ₹1-2 crore TERM insurance plan (₹10-15k/yr at 30) with spouse/child as nominee + run a direct equity SIP in a flexi-cap / index fund for the goal. Over 15 years, this combo typically beats a child ULIP by 25-40% in maturity value for the same outlay.
How do I estimate my child's education corpus?+
Start with today's cost: Indian private engineering ₹15-20L, MBA ₹25-40L, MBBS ₹60-80L private, US/UK undergrad ₹60L-1.2Cr, US MBA ₹1-1.5Cr. Apply education inflation of 10-12% for Indian institutions, 6-8% for abroad. A ₹25L goal today becomes ₹94L in 14 years at 10%. Our calculator does this math for you — set goal in today's rupees and inflation rate.
What is the "premium waiver" benefit in a child ULIP?+
On parent's death during the policy term, future premiums are waived but the policy continues to maturity with the full corpus paid to the child. This is the ONE genuine advantage of a child plan over term + SIP — though you can replicate it with a larger term cover that includes the goal corpus as part of the sum assured.
Are child ULIP returns tax-free?+
Under Section 10(10D), maturity proceeds are tax-free IF annual premium stays below 10% of sum assured. Budget 2021 added a ₹2.5 lakh/year cap on ULIP premium for tax-free maturity — premiums above that (for policies issued after Feb 2021) are taxed as capital gains at redemption (12.5% LTCG for equity-oriented after July 2024). SIPs in equity mutual funds get the same capital gains treatment, so no material tax advantage for child ULIPs.
Section 80C benefits on child plan premiums+
Yes, under OLD tax regime, premiums qualify for 80C deduction up to ₹1.5 lakh combined with other 80C items (PPF, ELSS, EPF, home loan principal). NEW regime eliminates 80C. If you're in the old regime and have 80C room remaining, the deduction partially offsets the ULIP charges drag — making it closer to parity with SIP. In the new regime, SIP wins more decisively.
What are the charges that eat returns in a child ULIP?+
Five main charges: (1) Premium allocation charge — 1-5% deducted upfront in early years; (2) Fund management charge — up to 1.35% annually (IRDAI cap); (3) Policy administration charge — ₹50-500/month; (4) Mortality charge — rising sharply with parent's age; (5) Fund switch/withdrawal charges. Combined drag: 1.5-2.5% annually over 10-15 years. Compare with direct equity MF SIP: 0.2-0.6% expense ratio, no other charges. That 1-2% annual difference compounds to 15-30% smaller corpus over 15-20 years.
When does a child ULIP still make sense?+
Three cases: (1) You genuinely cannot maintain disciplined SIPs without a "forced savings" structure; (2) You want premium waiver benefit + SIP discipline bundled and will stay invested for full term (early surrender destroys value); (3) You're in the old tax regime with unutilised 80C limit AND high marginal slab where deduction meaningfully offsets charges. For most salaried professionals in 30% slab with SIP discipline, separate term + direct equity MF is superior.