Child Plan Vs Mutual Fund @ 20000/-


Dear Sir,

I took ICICI Pru Child Policy in June 2011. Annual Premuim is 20370 for 23years and Sum Assured is 400000 and riders 400000. Total 800000
After that I realised that I will get very less amount (Max-8%) after maturity.
Now I came to know that there is no need of any child policy, if I take a term policy and invest balance in Mutual Funds (Balanced Funds).

Is it wise decission, if I forego 20000/- that I paid as first instalment premium.
So that I will take one term polcy and Mutual Funds.

Please suggest me.

5 replies on this article “Child Plan Vs Mutual Fund @ 20000/-”

  1. Dear Shiva Prasad Ravirala, First of all please cover yourself with a term plan of at least 15 times of your yly income. In case you are also running some loans like Home or car, increase your cover accordingly. Based upon your age & the ins. co. you are opting, the prem. for this cover amount ‘ll be anywhere from 10K to 20K to 40K for next 25 or 30Y term. This is your protection net for your family. Now comes the question of investing to create wealth for your goals.

    Start with HDFC Prudence & PPF in your child’s name. After 1-2 years, when you are able to understand the whole idea of MFs, you may start investing in Eq. funds if not investing already. Review the performance every 15-18 months to weed out any non performers.

    But the most important point if you are going this way is the discipline.



  2. Ramesh says:

    What is the name of the child policy?
    And see if there is an option of minimizing the premium per annum, and the minimum duration of keeping that money without severe charges. Ask them by email.

    Get more informed.

  3. Hi CodeRed & Abhishet

    Thank You for valuable advice.

    Sir, My main issue is whether stopping Child Policy (Foregoing One premium), is not wrong decission.

    Please suggest.

    Thank You
    R Siva Prasad

  4. Abhishek says:


    Adding to CodeRed, you can have a look at Balanced Funds like HDFC Prudence for your Child Education corpus.


  5. CodeRed says:

    It is heartening to note your eagerness to start investing for your child’s future education needs so early. Child plans from insurers as well as mutual funds are well marketed to kindle the emotions of parents, however, these products may not necessarily be the best to invest in. As you have several years to go before the goal, you have the benefit of time to build a sizeable corpus.
    You should look at investing regularly in large- and large- and mid-cap funds to get the most of power of compounding and SIP investments. You should consider large-cap funds such as DSPBR Top 100 Equity, Franklin India Bluechip or ICICI Pru Focussed Bluechip or large- and mid-cap funds such as HDFC Top 200 or BSL Frontline Equity. All these funds have a proven track record and performance history. Make sure to monitor the progress of these funds and consider moving to debt funds as you approach the year when you need the investment.

    Source: Value Research

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.