LIC Kids Plans: Is ₹1.5L Tax Break Worth the Lock-In?

LIC offers child insurance plans that pay out money at key education milestones, give life cover, and offer tax benefits. But these plans lock your money for 15-25 years — so it's worth comparing returns before you sign up.

Here's what happened: LIC's child plans like Jeevan Tarun offer staggered payouts at ages 18, 20, 22, and 25 — designed to align with college admission, hostel fees, and post-graduation needs.. These policies combine life insurance on the parent with a premium waiver — if the parent dies, the policy continues and the child receives all future benefits without further premiums.. Premiums qualify for Section 80C deduction up to ₹1.5 lakh per year, and maturity proceeds are tax-free under Section 10(10D) subject to sum-assured conditions..

What you should do: Compare the effective IRR of any LIC child plan (typically 5-6%) against a 15-year SIP in a large-cap index fund before committing — use the FV formula or a free online IRR calculator.. Check whether the plan you are considering includes a premium waiver on the proposer's death — this is the most valuable feature and not all child plans include it by default.. If you already hold a child policy, verify your nominee and proposer details are updated — an outdated proposer name can delay claims when your child actually needs the money..

Pair a term plan (₹50-60L cover, ₹700-900/month) with a Sukanya Samriddhi or index fund SIP instead of a bundled child policy — you get higher cover AND better returns for roughly the same outgo.

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