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Everything you Should Know about Sukanya Samriddhi Yojana

dateKnowledge Centre Team dateMay 24, 2021 views197 Views
Sukanya Samriddhi Yojana | Best Child Insurance Plan | Child Education Plan | Saving Plans for Child

The financial security of a girl child is a necessity in India and the government has been taking initiatives. Sukanya Samriddhi Yojana (SSY), launched on 22 January 2015, is a government-sponsored child insurance plan cum saving scheme to serve a girl child. SSY is a major part of the Beti Bachao, Beti Padhao Yojana. The account can be opened by the parents of any girl child under the age of 10. A Sukanya Samriddhi Account has a time of 21 years or until the girl child weds after the age of 18. The scheme is aimed at encouraging parents of girl child to build a fund for their future or higher education.

Sukanya Samriddhi Yojana- Interest Rates 2021

Sukanya Samriddhi Yojana Interest Rates are announced by the government quarterly. For Q1 (April-June) FY 2021-22, the interest rates are set at 7.6% p.a. The interest is calculated on yearly basis, yearly compounded as per the details provided by India Post website. SSY account has a high interest rate as compared to PPF accounts.

Here is the comparison for your reference:

Period SSY Interest Rates PPF Interest Rates
1st April, 2021 onwards 7.60% 7.10%
1st January, 2020 - 31st March, 2020 8.40% 7.90%
1st April, 2019 - 30th June, 2019 8.50% 8.00%
1st July, 2018 - 30th September, 2018 8.10% 7.60%
01st October 2017 - 26th December 2017 8.30% 7.80%
01st April 2017 - 30th June 2017 8.40% 7.90%

Eligibility Criteria for Sukanya Samriddhi Yojana

The Government of India has made Sukanya Samriddhi Yojana accessible for everyone, and hence, you can open an account at any post office. Understand the eligibility criteria for opening Sukanya Samriddhi Yojana account:

  • Just parents or legitimate guardians of the girl child can open a Sukanya Samriddhi account.
  • The girl child ought to be under 10 years at the time of account opening. The account can be operational till the girl child is 21 years old.
  • The opening investment can begin from ₹250 and a limit of ₹1,50,000 yearly with ongoing deposits in the products of ₹100.
  • An individual girl child cannot have numerous Sukanya Samridhhi accounts.
  • Only two Sukanya Samriddhi Yojana accounts are permitted per family, i.e., one for each.

Key Features of Sukanya Samriddhi Yojana (SSY)

It is a must to know the highlights of an investment scheme before investing money in it. There are a wide range of benefits of Sukanya Samriddhi Yojana account.

1. Interest rate

The interest is to be paid just on maturity or in case of a change of your girl's residency or citizenship standing. Sukanya Samriddhi Yojana yielded the highest return during the FY(2015-2016). However, ever since, the interest rate is continuing to decline.

2. Lock-in period

The lock-in duration of the Sukanya Samriddhi Yojana is 21 years. For instance, if the account is opened when the girl child is 5 years old, it will mature when she ages 26.

3. Deposit

A minimal deposit amount of ₹250 is required, each year, for 15 years. The maximal sum that can be put into a financial year is ₹1.5 lakh. Deposits can be created in multiples of 100 and through cash, cheque, DD (demand draft), or online transfer. You can put into several deposits in a year.

Yet, if you cannot make the base deposit in a given year, your account will be ceased. However, you can reactivate the account by paying a sum of ₹50 as a penalty and presenting the minimum required deposit sum.

4. Transfer of Accounts

If you change your domiciliation, you can transfer your Sukanya Samriddhi account to any post office or bank in the country or from a post office to a bank without any charges. You will have to submit address proof. For transfer under different conditions, you will be charged an expense of ₹100.

5. Number of Accounts

One account for one girl child, and a minimum of two accounts in one family is allowed. You can open multiple accounts if you have triplets (all-girls) or if your first child is a girl and twin girls are conceived later.

Tax Benefits of Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana provides you with great tax-saving benefits. The scheme accompanies the (EEE) status. This implies that:

The investments you make towards Sukanya Samriddhi Yojana are qualified for tax deductions under Section 80C of the Income Tax Act. Deposits of up to ₹1.5 lakhs are permitted. Should you decide to put ₹1.5 lakh in the scheme in a specific financial year, the whole investment will come out to be t tax-deductible.

  • The interest on your investment is additionally deductible from tax.
  • You don't need to pay any tax on maturity or withdrawal.

Sukanya Samriddhi investment scheme draws no taxes attributes for its EEE status. It can help you assemble a generous corpus through this child insurance plan over the years for your child's secure future.

Sukanya Samriddhi Yojana- Account Opening Process

Start a Sukanya Samriddhi account for your girl child by visiting a post office or any pre-approved bank. You will be required to fill the application form and submit it along with the accompanying documents:

  • An account opening form appropriately filled in
  • Birth certificate of the girl child
  • ID and address proof of the depositing party.
  • Medical certifications as verification of birth of various girl children at the same time.
  • Some other documents as required by the bank or post office.

Claim/ Withdrawal Procedure of SSY

You will have to submit the correctly filled withdrawal form alongside the SSY account passbook to the bank or post office branch where the account is opened.

To claim or withdraw prematurely, you need to fulfil a few conditions, for example, for marriage costs or the advanced education of the girl child.

On the account's maturity, the sum will be paid to the girl child holding the account.

For another situation, you may prematurely close the account and claim the deposit sum solely after finishing five years of account opening for the accompanying reasons:

  • On the demise of the account holder.
  • A life-threatening ailment to the account holder.
  • The demise of the guardian who maintained the account.

Through the Sukanya Samriddhi Yojana child insurance plan, you can contribute a few of your assets reserved for your girl in this scheme as it is secure and risk-free. Yet, it is an intelligent choice to have a blend of equity in your portfolio for your girl, to guarantee you have sufficient accounts for her advanced education and marriage regardless of inflationary pressing factors.

If you're looking for other alternatives to choose from or if you're looking for an insurance plan for your boy child, don't be disheartened; Canara HSBC Oriental Bank Of Commerce Life Insurance has an extensive range of child insurance plans for your child which are compatible enough to suit your every need. You can choose from a wide variety of child insurance plans to secure the future of your child. As the cost of education is rising, you need to create an education fund to give wings to your child’s dreams and aspirations.

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Frequently Asked Questions (FAQs) for Child Insurance

Any parent with a child between 0-15 years should opt for a child insurance plan. It helps you deliver inflation-beating returns for the various needs of the child while he/she grows up. As a child grows up, his/her financial needs increase substantially.

The importance of a good education cannot be overstated. Without quality education, a child may not reach his/her full potential. But the rising cost of education can become an impediment in higher education. A child education plan ensures that you do not have to worry about the money for your child’s education. It is a mix of insurance and investment. A part of child education plan is used to provide the financial security of insurance, while the balance is invested in market-linked instruments. The investible portion delivers decent returns in the long run, helping you accumulate a corpus for your child’s education.

Child plans are tailor-made financial products designed to secure children’s future. Typically, child plans have two components—insurance and investment. The insurance component protects the child in case of the parent’s demise, while the investment helps in accumulating a corpus for the child’s needs such as education and marriage. Child plans have several features that are primarily aimed at financially securing children. Some of the features are:

  • Maturity benefit
  • Premium funding option
  • Partial withdrawals
  • Milestone payments
  • Various investment funds
  • Protection of returns

The right time to buy child plans depends on the financial goal and the type of policy. Child insurance policies are long-term instruments and to generate decent returns it is advisable to invest as early as possible. You can invest in child insurance policies even before the child is born. Child education policies are relatively short-term policies. Child education policies can be chosen according to the financial goal. You can invest in child education policy as soon as the child is born if you plan to fund his/her primary and secondary education through the policy. If the aim is to accumulate funds for the higher education of the child, then you can invest at a later stage. In any case, it is not advisable to invest after the child has turned 15.

Child plans are meant to build a financial buffer for your child’s future needs, so, it is important to have a fail-proof plan. A few things to consider while buying child plans are:

  • Goal: It is pertinent to have a clear goal in mind as it determines the type and tenure of the policy. You should invest in a child plan as soon as the child is born. Starting early gives your investment to grow and helps you prepare better for your child’s needs. Similarly, selecting a long-term policy protects your child for a longer-term.
  • Premium waiver: While buying a child plan, it is mandatory to check if the premium waiver facility is available or not. Not having a premium waiver option can leave your child vulnerable in your absence.
  • Inflation: When you are investing for the long term, external factors like inflation cannot be ignored. Invest in ULIPs to generate inflation-beating returns. Invest 4G plan offers customers an option to choose from seven different funds with varying degrees of exposure to equity.
  • Bonus component: Along with the basic benefits of a child plan, insurance companies also offer additional benefits. Even though these benefits are small, they could add value considerably in the long run. For instance, Invest 4G plan provides benefits such as wealth boosters, loyalty additions and return of mortality charges.

The eligibility to open a child education plan is similar to a child insurance plan. The entry age is generally between 18 and 65 years. The maturity age is between 23 years and 80 years. You can start investing in a child education plan with Rs 5,000 per month or Rs 50,000 per year. The policy tenure varies between 5 years and 30 years.

There is no universal minimum instalment for a child education plan. Every insurer has its own minimum limit, even different plans have a different minimum limit. Invest 4G plan has a minimum limit of Rs 5000 if you choose to pay monthly premiums. The minimum premiums for quarterly and half-yearly payment tenures are Rs 15,000 and RS 30,000, respectively. In the annual mode, the minimum premium is Rs 50,000.

Child education plan can either be unit-linked or non-linked. The interest rate of ULIPs is determined by the fund chosen by the policyholder and the performance of the market. The interest rate for non-linked child education plan is decided by the insurance company.

The policy for premature closure of child education plan deposit differs from insurer to insurer. Some insurers allow premature closure of child education plan deposit. If the account is closed before the lock-in period expires, the fund’s value minus the surrender charges id deposited in the discontinued policy fund. The amount earns a minimum of 4% interest and will be paid to you after the lock-in period gets over. It the policy is surrendered after the lock-in period, the total fund value minus the surrender charges will be given to you. But premature closure of child education plan can be fraught with risks and you may not achieve the stated aim. Invest 4G plan allows you partial withdrawals without surrendering the policy, which essentially disincentivises premature closure of the policy.

Child education plans come with flexible payout options. You can either set up a standing instruction for instalment payment when you buy the policy or inform the insurance company during the policy tenure. Insurance companies generally accept requests for instalment payment a few months before the maturity.

One of the defining features of child education policies is the partial withdrawal facility. Most insurance companies allow partial withdrawal from child education plans to take care of liquidity needs. Invest 4G plan allows partial withdrawal after the 5th policy year.

You can avail a secured loan against a child education plan. The loan can be used to fund the higher education of the child.

Child education plans are like child insurance plans with some slight differences. Child education plans have relatively shorter tenures than child insurance plans. Child education plans have milestone payments coinciding with the educational stages of the child. These plans have a limited scope and are not dynamic products like child insurance plans.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

Child education plan not just secures the financial future of the child but also provides tax benefits to the policyholder. The premiums paid for child education plan are eligible for tax deduction under Section 80C of the Income Tax Act. The maturity amount is also tax-exempt under Section 10(10D) of the income tax law.

While there are several child plans in the market, the Invest 4G plan is the best of the lot. Invest 4G with its unique proposition provides all-round protection to your child. With the online ULIP plan , you can decide the premium payment tenure and also the settlement option.

You can invest in a number of financial products for your child’s education. If you need a long-term savings instrument, the PPF is an eligible option. But if the child’s education is the sole aim of your investment, nothing is better than a market-linked scheme. Market-linked investments, especially equity investments tend to perform better in the long run. Investment in market-linked schemes can ensure handsome returns on your savings by the time your child grows up. Opt for Invest 4G plan to give your child a secure educational future.

Getting insurance required a visit to the bank or the insurer’s branch earlier. But with the popularity of online ULIP plans, getting an insurance plan has become extremely easy. You can buy a host of insurance products directly from www.canarahsbclife.com and get discounts on the premium from the company.

While the cost of insurance depends on a host of factors such as tenure, coverage and the mode of payment. With Invest 4G plan, you can start investing for the financial future of your child with just Rs 5,000 every month. However, if you are not clear about the cost of insurance for your child, you can use the ‘life insurance calculator’ in the ‘tools and calculator’ section of www.canarahsbclife.com. Similarly, you can use the ‘child education planning calculator’ to get an idea of the cost of child education plans.

Considering the flexibility in the premium payment tenure and the payout settlement, Invest 4G is the best scheme for the child. The Invest 4G plan also provides the premium funding option which ensures the financial stability of the child even in the absence of the policyholder.

To choose the ideal child insurance plan, you will have to start with planning the various stages of the plan and your child-specific milestone payments.

  • Paying capability: Just investing in a child insurance plan is not enough, you will have to pay the premiums regularly and timely to keep the policy active. Make a correct estimate of your paying capability and decide the premium payment frequency.
  • External factors: While buying a child insurance plan, consider the external factors such as inflation and interest rates before finalising the maturity benefit.
  • Premium waiver: The premium funding facility is a crucial feature for the success of the child insurance plan. Not having the premium waiver facility can leave a costly chink in your child insurance armour.

To choose the ideal child insurance plan, you will have to start with planning the various stages of the plan and your child-specific milestone payments.

Having life insurance has become a necessity and the earlier you buy one the better. Life insurance plans are cheaper when you are young. Moreover, when you are buying products such as ULIPs that have an investment component, having a long policy tenure helps in compounding your savings.

Most insurance companies have started offering online policies. You can either pay through offline mediums or opt for online ULIP plans. Buying insurance policies online is cheaper and hassle-free. The premiums can easily be paid through the website or mobile app.

There are three major rider benefits provided with child insurance plans.

  • Premium waiver benefit
  • Accidental death and disability cover
  • Critical illness cover
  • The frequency of the payout is decided by the policyholder while buying the insurance plan. Even if you fail to define the frequency of the payout while buying the policy, it can easily be rectified during the policy term.

    You can appoint a minor as nominee for your plan, but you will have to nominate an appointee who will have to give his/her consent to act as an appointee. The appointee will cease to hold power once the minor nominees become majors. In the event of a claim, of your nominee is minor and you did not name an appointee, the proceeds will go to the legal heirs.

    No child should give up on his/her dreams to study in premier institutes like IIT and IIM due to financial constraints. With the rising cost of higher education, investing in a child plan has become extremely important. Child plans help you save in a disciplined way for a secure financial future of your child.

    Canara HSBC Oriental Bank of Commerce offers a plethora of child plans to take care of varied needs. With unique features such as fund switching, premium redirection, change in sum assured and return of mortality charges, child plans from Canara HSBC provide unprecedented coverage.

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