What Is a Child Plan?

Give your child something more than just your love!

Child plans are specially structured to secure their future. As the cost of education is high if sought from a reputed university, proper planning plays a vital role in giving your child the education they deserve. Apart from education, a child plan also provides maturity and death benefits in the case of a parent’s disability or death due to an accident.

Single Premium vs Regular Premium Child Plans

Now that we know what child plans are, let us see whether you should select a single premium or regular premium child plan.

Parameters Single Premium Plan Regular Premium Plan


You pay only once, and your obligations are over. There is no need to keep track of dates to learn when the premium is due.

As the premiums are payable each year, you need to keep track of dates when the premium is due to avoid missing them.


As the premium for the whole policy term is paid together, the amount is massive and therefore, you must assess the affordability.

As the premiums are distributed over the policy term, it becomes affordable for a large section of society.

Value for money

Imagine Mr A has an option to pay Rs 10,000 per year as a premium for 10 years or Rs 80,000 upfront. Mr A most probably will see the benefit of saving Rs 20,000 and go for the second option. However, the Rs 80,000 he will spend will be blocked for 10 years, which would have otherwise been available for use.

Continuing with the same example, considering the inflation rate of 5.5%, if a Rs 10,000 yearly premium is discounted to the present value, then today, Mr A will pay Rs 75,376. Thus, premiums paid over the policy term are lower compared to upfront premiums.

Tax Benefits

The premium paid is allowed as a deduction under section 80C of the Income Tax Act, 1961. However, the deduction is limited up to Rs 1,50,000. Therefore, if your single premium amount exceeds the above limit, your deduction will be limited to Rs 1,50,000, and the rest of the premium will not offer tax benefits.

Unlike a single premium policy, the deduction for the premium paid during the policy term is available each year under section 80C. Therefore, it will lead to tax savings each year.


Once the premium is paid, your position is locked as per the current market situation, which denies the rupee cost averaging benefit*.

As the market is volatile, the value of investments fluctuates as per the market volatility. Paying a fixed sum over the policy term allows the benefits of rupee cost averaging.

Future add-on benefits

Once the premium is paid, it may not be possible to obtain the benefits of other advantages that the company may offer in the future.

The policyholder may avail of various benefits that the company currently provides and may come up with in future during the policy term.

*Rupee Cost Averaging: It is a phenomenon where, as the market fluctuates, the values of investments such as shares and units increase and decrease. Therefore, when the market falls, the investor is allocated a greater number of shares or units. Conversely, when the market rises, the investor is allocated fewer shares or units but their per share/unit value increases. Thus, both situations offset each other.

Bottom Line

Whether one should go for a single premium policy or a regular premium policy depends on individual cases and circumstances. However, in terms of benefits, the regular premium policy offers a greater advantage than the single premium policy. Future Generali India Life Insurance provides a portfolio of plans to meet all your future uncertainties and ensure a regular flow of income. Our Education Plan can help you ensure the all-around education and development of your child. Visit the Future Generali India Life Insurance website to learn more about diverse savings and insurance plans.