Children policy will get tax benifits in which section?

POSTED BY etaxmentor ON January 11, 2013 2:46 pm COMMENTS (4)

                            I am married 25 yr old from Hyderabad(India), i have baby boy of 8 month.
If i am taking a children policy for my baby and i will be paying the installments for that then will i get tax benefit on those installments under which section?

4 replies on this article “Children policy will get tax benifits in which section?”

  1. No math. not sure about emotions! But I think a PPF is a solid debt instrument , EEE in nature and a partial lock-in which you are obviously aware of

    A good balanced fund should be okay for a disciplined investor.However I will be uncomfortable in a single fund. Concept-wise it is great. Also one doesn’t have to do rebalancing as this is done automatically.

    1. Ramesh says:

      Ok. Thanks.

      Take 2-3 different equity-oriented balanced funds (I was not implying a single fund this time).

      Unless one is knowledgeable about asset allocation and rebalancing concepts (most are not, imo), a separate debt instrument is not the ideal vehicle. If you know, then you can manage in any way.

      Ramesh

  2. financial experts advice us not to mix insurance and investment. It is like drinking and driving. We will reach somewhere but no guarantee that it will be home!

    So don’t take any child policy.

    Since your child is pretty young open a PPF account in his name and use that for tax saving. The money will mature after 15 financial years,
    Invest some portion in PPF and in some good mutual funds
    Use this guide to select a mutual fund

    http://freefincal.wordpress.com/step-by-step-guide-to-choosing-a-mutual-fund/

    tax saving should not be a primary goal. exhaust 80C by integrating them with your retirement planning.

    invest more in equity MFs since your child is very young so that you have enough corpus to fulfill all his dreams

    Avoid all child policies. They are complicated products.

    1. Ramesh says:

      Dear FFC,

      I just do not understand the concept of PPF + equity MF. Why not an equity balanced fund directly, with its in-built asset allocation? Even that will be tax-free.

      This is not for argument sake. I really want to understand why do you stress on PPF for a child. Is there any maths behind it? Or is it some kind of emotional investment or what?

      Thanks
      Ramesh

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