Insurance policy is the most preferred choice among most Indians to invest for their children's education and marriage. Despite the fact that it is not an ideal investment, their trust in insurance is absolutely unshakable.
Well, now there is an option (apart from the good old PPF) that should deliver a knockout blow to the insurance policies that you buy specifically to protect your daughters' future.
It is known as the Sukanya Samriddhi Scheme.
It is one more addition to the long list of Post Office Small Savings Schemes and its salient features are enumerated below.
1. Any parent or a legal guardian can open an account under this scheme in the name of the girl child.
2. The account can be opened anytime from her birth till she attains the age of 10 years (since the scheme is very new, it provides a one year grace as of now : girl child born between 2.12.2003 & 1.12.2004 is covered if the account is opened up to 1.12.2015).
3. You can open only one account per girl child and for maximum two girl children only (and three in some special cases).
4. Maximum amount of Rs.1.50 lakhs can be deposited in a financial year (subject to a minimum of Rs.1,000).
5. An interest of 9.1%, compounded annually, is applicable for the FY 2014-15.
6. Like other Post Office Schemes, new rates would be announced every year.
7. Like PPF, you enjoy (a) tax deduction u/s 80C, (b) interest accruing in the account every year is tax-free and (c) withdrawal too is tax exempt.
8. Deposits have to be made for 14 years from the date of opening the account.
9. The scheme will mature after 21 years. However, if the marriage happens before such period of 21 years is complete, the account shall NOT continue after marriage.
10. Premature closure of the account is not permissible.
11. However, 50% of the balance as at the end of preceding financial year, can be withdrawn for the child's higher education or marriage; provided at that time she is at least 18 years of age.
12. You can open a Sukanya Samriddhi Account either at a post office or a commercial bank authorized to accept such deposits.
In terms of long time-frame of 15-20 years, safety, sec 80C benefit and tax-free returns, Sukanya Samriddhi Scheme and insurance are almost similar.
However, a typical traditional insurance plan will give you at best 5-7% p.a. returns as against 9.1% in Sukanya Samriddhi Scheme.
Let's take a simple case where you deposit / pay premium of Rs.50,000 for 14 years and the maturity happens in the 15th year. Then your daughter can hope to receive at most around Rs.12 lakhs from an insurance plan (assuming 7% returns). Whereas, Sukanya Samriddhi Scheme would give her around Rs.14.20 lakhs (assuming 9% returns).
Moreover, in insurance you are committed to pay the fixed premium year after year. However, with Sukanya Samriddhi Scheme you have the option to increase or decrease your investment in any year as per your financial comfort. In addition, you can prematurely take out money when required for education or marriage. Thus the scheme provides immense flexibility.
Therefore, Sukanya Samriddhi Scheme is any day a far better option to insurance. (The only drawback, as is evident from the name of the scheme, is that you can make this absolutely brilliant investment only for your daughters.)
Well, now there is an option (apart from the good old PPF) that should deliver a knockout blow to the insurance policies that you buy specifically to protect your daughters' future.
It is known as the Sukanya Samriddhi Scheme.
It is one more addition to the long list of Post Office Small Savings Schemes and its salient features are enumerated below.
1. Any parent or a legal guardian can open an account under this scheme in the name of the girl child.
2. The account can be opened anytime from her birth till she attains the age of 10 years (since the scheme is very new, it provides a one year grace as of now : girl child born between 2.12.2003 & 1.12.2004 is covered if the account is opened up to 1.12.2015).
3. You can open only one account per girl child and for maximum two girl children only (and three in some special cases).
4. Maximum amount of Rs.1.50 lakhs can be deposited in a financial year (subject to a minimum of Rs.1,000).
5. An interest of 9.1%, compounded annually, is applicable for the FY 2014-15.
 |
| Forget Insurance. Think Sukanya Samridhhi Yojana for your daughter. |
6. Like other Post Office Schemes, new rates would be announced every year.
7. Like PPF, you enjoy (a) tax deduction u/s 80C, (b) interest accruing in the account every year is tax-free and (c) withdrawal too is tax exempt.
8. Deposits have to be made for 14 years from the date of opening the account.
9. The scheme will mature after 21 years. However, if the marriage happens before such period of 21 years is complete, the account shall NOT continue after marriage.
10. Premature closure of the account is not permissible.
11. However, 50% of the balance as at the end of preceding financial year, can be withdrawn for the child's higher education or marriage; provided at that time she is at least 18 years of age.
12. You can open a Sukanya Samriddhi Account either at a post office or a commercial bank authorized to accept such deposits.
In terms of long time-frame of 15-20 years, safety, sec 80C benefit and tax-free returns, Sukanya Samriddhi Scheme and insurance are almost similar.
However, a typical traditional insurance plan will give you at best 5-7% p.a. returns as against 9.1% in Sukanya Samriddhi Scheme.
Let's take a simple case where you deposit / pay premium of Rs.50,000 for 14 years and the maturity happens in the 15th year. Then your daughter can hope to receive at most around Rs.12 lakhs from an insurance plan (assuming 7% returns). Whereas, Sukanya Samriddhi Scheme would give her around Rs.14.20 lakhs (assuming 9% returns).
Moreover, in insurance you are committed to pay the fixed premium year after year. However, with Sukanya Samriddhi Scheme you have the option to increase or decrease your investment in any year as per your financial comfort. In addition, you can prematurely take out money when required for education or marriage. Thus the scheme provides immense flexibility.
Therefore, Sukanya Samriddhi Scheme is any day a far better option to insurance. (The only drawback, as is evident from the name of the scheme, is that you can make this absolutely brilliant investment only for your daughters.)
