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Savings Plan for Grandchildren

As a grandparent, you can start an investment in a savings plan for yourself while making your grandchild, a minor, a nominee of the policy.

  • 7,599 Views | Updated on: Jan 11, 2024

Children are the most loved ones in a family. Especially when they are your grandchildren, you have extra affection for them. Many of us want to add up to the education funds for grandchildren to support them in their future and to ensure that they get the best education and are financially strong enough to have access to any resource to support them in their life ahead.

Yes, traditional options like gifting gold or cash can be one of the way to support them, but did you ever think of a savings plan for grandchildren? As modern society is continuously evolving, so are its requirements and expenses. If you are planning to set up an education fund for grandchildren, then making an informed decision is your best bet. In this article today, we will tell you all about a savings plan for grandchildren, the importance of opting for one, and the best savings plan for grandchildren. Plus, we will also help you understand how to opt for tax-free savings for grandchildren.

Savings for Grandchildren While Investing in Your Name?

As a grandparent, you can start an investment in a savings plan for yourself while making your grandchild, a minor, a nominee of the policy. The nominee can claim the policy’s benefits upon the demise of the grandparent once they are an adult.

In case of a minor nominee, you should mention details of the minor’s parent and the customer KYC of the investing grandparent.

What is a Savings Plan for Grandchildren?

These plans are designed to offer the option to the grandparent to contribute to their grandchildren’s financial stability and security. In addition, these plans are designed to support the grandchild at any point in their life whenever required.

Most importantly, upon the demise of the grandparent, these plans can serve as a pillar of support contributing towards the requirement related to your grandchild’s education, health, and social expenses. This will also help minimize the financial burden of your grandchildren as they foray further in life towards higher education and gradually into their professional life. Thus, it is highly recommended to opt for a savings plan for grandchildren.

What is the Importance of Saving Schemes for Grandchildren?

Here are some pointers to highlight the importance of saving schemes for grandchildren:

  • Provides you with an option to secure your grandchildren’s financial future until they can manage their own life
  • Offers additional support for the grandchildren up and above the help of their parents
  • Serves as an added resource in supporting grandchildren’s educational requirements
  • Can be very useful as a health fund for the grandchild
  • Comes with added benefits provided by the government and insurance company for your grandchild

Best Savings Plan for Grandchildren in India

As you are planning to invest in your grandchildren and it concerns their future, it is essential to do your research and understand what the market offers so you can make an informed decision. Finding the right savings plan for grandchildren can be a tough call, as numerous policies are available in the market. However, only you can assess the future requirement of your grandchild and decide on a financial goal for him accordingly.

Here are some of the best options that you must consider as a potential savings plan for grandchildren:

ULIPs for Child

ULIP is one of today’s most popular and modern investment tools that offer you the benefit of both insurance and investment in one policy. Child ULIP policies have additional benefits too, and in case of an unfortunate demise of the policyholder, the said child is liable to receive a lump sum payout or regular payouts.

Systematic Investment Plan (SIPs)

The best way to ensure that your investment has matched the inflation in the long term and has grown with the market. This is the reason why SIPs are considered the best education funds for grandchildren. They allow you to invest in a diversified market portfolio managed by experts and give you a decent return in the long term.

Public Provident Fund (PPF)

This is the safest and most secure financial tool you can opt for as tax-free savings for grandchildren. Being a traditional and government-backed financial product, PPFs are quite popular and reliable. A PPF account for a child can be only opened by the guardians and nominee addition is mandatory here. Additionally, a minimum of ₹500 and a maximum of ₹1.5 lakhs can be deposited in this account annually, wherein, payments can be made as per your convenience.

Sukanya Samriddhi Yojana

If you are looking to invest in a savings scheme for a girl-grandchild, Sukanya Samriddhi Yojana is a great pick. It is a government-backed savings scheme dedicated to the girls. It has numerous benefits linked to it. This account allows a minimum deposit of ₹250 and a maximum of ₹1.5 lakhs every financial year. Furthermore, the deposits are eligible for deductions under Section 80C of the Income Tax Act.TThere are many other investment options available for grandchildren. However, opting for a good one depends on your ability to assess the futuristic requirements of your grandchild. Therefore, it is advised to go through the policy documents thoroughly and read all the terms and clauses before option for a savings plan for grandchildren.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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