LIC Policy vs PPF vs Mutual Funds for Your Child

LIC vs PPF vs Mutual Funds: Quick Answer for Busy Parents

Can’t read the full article? Here’s what you need to know:

If you want…	Choose this
Maximum safety + guaranteed returns	PPF (7.1% return, government-backed)
Life insurance + savings combined	LIC Child Plans (protection + milestone payouts)
Highest wealth growth potential	Mutual Funds/SIP (12-17% historical returns)
Best overall strategy	Combine all three (layered approach)

Education costs in India are rising at 10-12% annually. A degree costing ₹25 lakhs today will cost nearly ₹1 crore when your newborn reaches college. This guide helps you choose the right investment mix to beat inflation and secure your child’s future.

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Why This Decision Matters in 2026

As a parent in India today, you’re facing unprecedented financial pressure:

• Higher education costs: Now exceeding ₹50 lakhs for quality degrees
• Inflation rate: Education inflation at 10-12% vs general 6-7%
• Time is critical: Starting at birth vs age 5 = 3x more corpus at age 18
• Career competition: Global opportunities require substantial funding

The good news? You don’t need lakhs per month. Even ₹5,000 monthly invested wisely can build ₹25+ lakhs over 15 years.

Let’s break down LIC Policy vs PPF vs Mutual Funds for child investment — with real numbers, actual policy examples, and honest pros/cons.

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Understanding Your Three Main Options

What is LIC Child Plan?

LIC (Life Insurance Corporation) child plans are insurance-cum-investment products that provide:

• Life insurance coverage for parent
• Guaranteed milestone payouts (at ages 18, 20, 22, 25)
• Premium waiver benefit if parent passes away
• Tax benefits under Section 80C and 10(10D)

Best for: Parents who want guaranteed payouts + life insurance protection

What is PPF for Children?

PPF (Public Provident Fund) is a government-backed savings scheme offering:

• Fixed interest rate: 7.1% per annum (Q2 FY 2025-26)
• Complete tax exemption: EEE status (deposits, interest, maturity all tax-free)
• 15-year lock-in period (extendable)
• Zero risk with government guarantee

Best for: Risk-averse parents seeking guaranteed, tax-free returns

What are Child Mutual Funds?

Children’s Mutual Funds are market-linked investment vehicles providing:

• Higher return potential: 12-17% historical CAGR
• Professional fund management
• Lock-in: 5 years or until child reaches 18
• Flexibility: Start SIP from ₹500-1,000/month

Best for: Long-term wealth creation with managed market risk

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LIC Policy for Child: Detailed Analysis

Top LIC Child Plans in 2026

1. LIC Jeevan Tarun

• Plan Type: Non-linked, with-profits plan
• Entry Age: Child 90 days – 12 years
• Maturity Age: 20 or 25 years (as chosen)
• Key Benefit: Education-focused lump sum payout
• Premium Payment: Limited pay (5-12 years)

2. LIC New Children’s Money Back Plan (Plan No. 832)

• Plan Type: Participating money-back plan
• Sum Assured: Minimum ₹1,00,000
• Survival Benefits: 20% of Sum Assured at ages 18, 20, 22
• Final Payout: 40% + bonuses at age 25
• Premium Waiver: Available in case of parent’s death

Real Example: LIC New Children’s Money Back Plan

Scenario: Rajesh opens this plan for his newborn daughter

Policy Details:

• Sum Assured: ₹5,00,000
• Annual Premium: ~₹35,000 (varies by age/term)
• Policy Term: 25 years
• Premium Payment: Until child turns 18

Payouts:

• Age 18: ₹1,00,000 (20% of SA) — College admission fees
• Age 20: ₹1,00,000 (20% of SA) — Second-year college expenses
• Age 22: ₹1,00,000 (20% of SA) — Postgraduate/career setup
• Age 25: ₹2,00,000 (40% of SA) + bonuses — Marriage/business/higher studies abroad

Death Benefit: If Rajesh passes away during premium payment term, all future premiums are waived, and the child still receives all benefits as scheduled.

Total Guaranteed Return: ₹5,00,000 + accrued bonuses (typically ₹2-3 lakhs additional)

Tax Benefit: Completely tax-free under Section 10(10D)

LIC Child Plans: Pros & Cons

Advantages: ✅ Life insurance protection for parent
✅ Guaranteed milestone-based payouts
✅ Premium waiver rider available
✅ Tax-free maturity (Section 10(10D))
✅ Deduction under Section 80C (₹1.5L limit)
✅ No market risk
✅ Disciplined long-term savings

Disadvantages: ❌ Lower returns vs market-linked products (5-6% effective)
❌ Long lock-in period
❌ High premium commitment
❌ Returns may not beat inflation fully
❌ Less liquidity
❌ Complex policy terms

When to Choose LIC Child Plan

✔️ You want life insurance + savings combined
✔️ You prefer guaranteed, milestone-based payouts
✔️ You’re risk-averse and want zero market exposure
✔️ You want premium waiver protection for your child

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PPF for Child: Complete Guide

PPF Account for Minor: Key Features 2026

Current Interest Rate: 7.1% per annum (reviewed quarterly)
Compounding: Annual
Lock-in Period: 15 years
Minimum Deposit: ₹500 per year
Maximum Deposit: ₹1,50,000 per year
Account Opening: Can open for child below 18 years
Control: Parent/guardian manages until child turns 18
Extension: Can extend in 5-year blocks after maturity

Tax Benefits of PPF

EEE Status (Exempt-Exempt-Exempt):

1. Deposits: Deduction up to ₹1.5 lakh under Section 80C
2. Interest earned: Completely tax-free
3. Maturity amount: 100% tax-free

This makes PPF one of the most tax-efficient investments in India.

Real Example: PPF Investment for Newborn

Scenario: Priya opens PPF for her 6-month-old son

Investment Strategy:

• Monthly deposit: ₹10,000 (₹1,20,000 annually)
• Duration: 15 years
• Interest rate: 7.1% p.a. (current rate)

Calculation:

• Total deposits over 15 years: ₹18,00,000
• Interest earned: ₹9,35,000 (approx)
• Maturity value at 15 years: ₹27,35,000 (100% tax-free)

At child’s age 18 (if extended 3 more years):

• Corpus grows to: ₹33+ lakhs (no additional deposits)

Cost breakdown for education:

• Engineering degree (2041): ₹15-20 lakhs ✅ Covered
• MBA/Masters (2043): ₹10-15 lakhs ✅ Covered
• Remaining: Emergency/marriage fund

PPF Withdrawal Rules

Partial Withdrawal:

• Allowed from 7th financial year
• Maximum: 50% of balance (4 years prior)
• Only one withdrawal per year

Loan Against PPF:

• Available from 3rd to 6th year
• Up to 25% of balance (2 years prior)
• Interest: PPF rate + 1%

Premature Closure:

• Generally not allowed
• Exceptions: Medical emergency, higher education

PPF for Child: Pros & Cons

Advantages: ✅ Highest safety (government-backed)
✅ Completely tax-free (EEE status)
✅ Decent fixed returns (7.1% p.a.)
✅ Forced long-term saving
✅ No market volatility
✅ Loan facility available
✅ Can open from birth
✅ Low minimum investment (₹500/year)

Disadvantages: ❌ Returns may not beat education inflation (10-12%)
❌ 15-year lock-in period
❌ Annual deposit cap (₹1.5 lakh)
❌ Limited liquidity
❌ Interest rate subject to govt changes

When to Choose PPF for Child

✔️ You want 100% safety with zero risk
✔️ You prefer completely tax-free returns
✔️ You can commit to 15+ year horizon
✔️ You want government-guaranteed returns
✔️ You’re extremely risk-averse

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Mutual Funds for Child: Growth Powerhouse

Understanding Children’s Mutual Funds

Children’s mutual funds (also called child-oriented funds) are specially designed investment vehicles that:

• Invest in equity, debt, or hybrid portfolio
• Have minimum 5-year lock-in
• Focus on long-term wealth creation
• Can transfer to child at age 18

Industry Growth: Children’s fund AUM grew 160% to ₹25,675 crore (Nov 2025), showing rising parent adoption.

Top Children’s Mutual Funds in India 2026

Based on 5-year CAGR performance:

1. HDFC Children’s Gift Fund

• AUM: ₹10,600+ crore
• 5-Year CAGR: ~16%
• Type: Hybrid (equity + debt)
• Lock-in: 5 years or till child turns 18
• Min SIP: ₹1,000/month

2. ICICI Prudential Child Care Fund – Gift Plan

• AUM: ₹2,800+ crore
• 5-Year CAGR: ~17%
• Type: Hybrid aggressive
• Lock-in: 5 years or age 18
• Min SIP: ₹1,000/month

3. SBI Magnum Children’s Benefit Fund

• AUM: ₹1,200+ crore
• 5-Year CAGR: ~15%
• Type: Balanced hybrid
• Lock-in: 5 years or age 18
• Min SIP: ₹500/month

4. Aditya Birla Sun Life Bal Bhavishya Yojna

• AUM: ₹850+ crore
• 5-Year CAGR: ~14.5%
• Type: Conservative hybrid
• Lock-in: 5 years or age 18
• Min SIP: ₹1,000/month

Real Example: Mutual Fund SIP for Child Education

Scenario: Amit starts SIP for newborn daughter

Investment Details:

• Monthly SIP: ₹5,000
• Fund: HDFC Children’s Gift Fund
• Duration: 15 years
• Assumed CAGR: 12% (conservative vs historical 16%)

Calculation:

• Total investment: ₹9,00,000 (₹5,000 × 12 × 15)
• Estimated corpus at 12% CAGR: ₹25,09,000
• Estimated corpus at 14% CAGR: ₹29,89,000
• Estimated corpus at 16% CAGR: ₹35,70,000

Comparison with PPF:

• Same ₹5,000/month in PPF (7.1%) = ₹16,50,000
• SIP advantage: ₹8.5-19 lakhs MORE

Tax Implications:

• Long-term capital gains (LTCG): 10% above ₹1 lakh gain per year
• Estimated tax on ₹25L corpus: ~₹1.5-2 lakhs
• Net amount: ₹23-24 lakhs

SIP Strategy: Systematic Investment Plan

What is SIP? A Systematic Investment Plan lets you invest fixed amounts monthly, enabling:

✅ Rupee cost averaging: Buy more units when market is down
✅ Disciplined investing: Automated monthly deductions
✅ Lower risk: Spread investments across market cycles
✅ Flexibility: Can increase/decrease/pause anytime

Recommended SIP Allocation:

• Age 0-5: 80% equity funds, 20% debt
• Age 6-10: 70% equity, 30% debt
• Age 11-15: 60% equity, 40% debt
• Age 16-18: 40% equity, 60% debt (reduce risk before goal)

Mutual Funds for Child: Pros & Cons

Advantages: ✅ Highest return potential (12-17% historical CAGR)
✅ Beats inflation comfortably
✅ Professional fund management
✅ Low entry barrier (₹500 SIP)
✅ High liquidity after lock-in
✅ Flexibility to switch funds
✅ Can increase/pause SIP
✅ Wealth compounding power

Disadvantages: ❌ Market risk (returns not guaranteed)
❌ Value can fluctuate short-term
❌ Requires emotional discipline
❌ LTCG tax applicable
❌ Fund performance varies
❌ Need to select right fund
❌ Market crashes can impact corpus

When to Choose Mutual Funds for Child

✔️ You have 10+ year investment horizon
✔️ You want maximum wealth creation
✔️ You can handle market volatility
✔️ You want to beat inflation significantly
✔️ You prefer professional management
✔️ You want flexibility and liquidity

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LIC vs PPF vs Mutual Funds: Detailed Comparison Table

Primary Comparison Chart

Parameter	LIC Child Plans	PPF	Child Mutual Funds
Primary Purpose	Protection + Savings	Safe Long-term Savings	Wealth Creation
Returns (Annual)	5-6% (bonus-based)	7.1% (fixed)	12-17% (variable)
Risk Level	Very Low	Zero	Medium to High
Govt Backing	Yes (PSU)	Yes (100%)	No (SEBI regulated)
Market Risk	No	No	Yes
Lock-in Period	Till child’s milestone age (18-25 yrs)	15 years	5 years or age 18
Tax on Deposits	Deduction u/s 80C (₹1.5L)	Deduction u/s 80C (₹1.5L)	No deduction
Tax on Returns	Tax-free (10(10D))	Tax-free (EEE)	LTCG 10% above ₹1L
Tax on Maturity	Completely tax-free	Completely tax-free	LTCG applicable
Min Investment	~₹20-50K/year premium	₹500/year	₹500-1,000/month SIP
Max Investment	No upper limit	₹1.5L/year	No upper limit
Life Insurance	✅ Yes	❌ No	❌ No
Premium Waiver	✅ Available	❌ Not applicable	❌ Not applicable
Milestone Payouts	✅ Yes	❌ No (lump sum only)	❌ No (need to redeem)
Liquidity	Very Low	Low (after 7 years)	Medium-High
Loan Facility	✅ Available	✅ Available (3-6 yrs)	❌ No
Inflation Protection	Weak (5-6% < 10%)	Moderate (7.1% < 10%)	Strong (12-17% > 10%)
Best For	Risk-averse + need insurance	Maximum safety seekers	Long-term wealth builders

Returns Comparison: ₹10,000 Monthly Investment Over 15 Years

Investment Type	Total Invested	Approx. Returns	Maturity Value	Tax Impact
LIC Child Plan	₹18,00,000	5-6%	₹26-28 lakhs	✅ Tax-free
PPF	₹18,00,000	7.1%	₹32-33 lakhs	✅ Tax-free
Mutual Fund (12% CAGR)	₹18,00,000	12%	₹50+ lakhs	~₹3L tax = ₹47L net
Mutual Fund (15% CAGR)	₹18,00,000	15%	₹65+ lakhs	~₹4L tax = ₹61L net

Key Insight: Even after tax, mutual funds potentially deliver 40-85% higher corpus than LIC/PPF if returns meet historical averages.

Which is Best for Your Child? Decision Framework

Choose LIC Child Plan If:

✅ Your primary concern is: “What happens to my child if I die?”
✅ You want: Guaranteed milestone payouts without effort
✅ You prefer: Zero market exposure
✅ You need: Life insurance + savings combined
✅ You can afford: ₹20-50K annual premium commitment
✅ You value: Completely tax-free maturity

Ideal Parent Profile: Conservative, seeking insurance protection, comfortable with 5-6% returns

Choose PPF If:

✅ Your primary concern is: “I want absolute safety”
✅ You want: Government-guaranteed returns
✅ You prefer: Complete tax freedom (EEE)
✅ You can commit to: 15-year lock-in
✅ You’re investing: Up to ₹1.5L per year
✅ You value: Simplicity and zero paperwork

Ideal Parent Profile: Risk-averse, disciplined saver, values tax efficiency over high returns

Choose Mutual Funds If:

✅ Your primary concern is: “I want maximum wealth for my child”
✅ You want: Inflation-beating returns
✅ You can handle: Market ups and downs
✅ You have: 10+ year investment horizon
✅ You prefer: Professional fund management
✅ You value: Flexibility and liquidity

Ideal Parent Profile: Growth-focused, can stay invested during volatility, wants to maximize corpus

The Honest Truth Most Articles Won’t Tell You

About LIC:
LIC child plans are NOT pure investments — they’re insurance products with an investment component. The 5-6% effective return is lower than PPF. But if you die prematurely, the premium waiver + guaranteed payouts make LIC irreplaceable for your child’s protection.

About PPF:
PPF is extraordinarily safe and tax-efficient. But with education inflation at 10-12% and PPF returning 7.1%, your real (inflation-adjusted) returns are near zero or slightly negative. It preserves wealth but doesn’t multiply it aggressively.

About Mutual Funds:
Mutual funds offer the highest growth potential. But past performance ≠ future results. The 2020 crash saw portfolios drop 35-40%. Parents who panic-sold locked in losses. Those who stayed invested recovered and made gains. MFs require emotional strength.

Bottom Line: There’s no single “best” option. The right choice depends on your goals, risk appetite, and financial situation.

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The Smart Parent’s Strategy: Layered Approach

Recommended: Don’t Choose One — Combine All Three

Most financial advisors recommend a layered strategy that balances protection, safety, and growth:

Strategy Example: ₹15,000 Monthly Budget

Monthly Allocation:

1. ₹5,000 → LIC Child Plan

   • Provides life insurance
   • Guarantees milestone payouts
   • Premium waiver protects child’s future
   • Role: Safety net + discipline

2. ₹5,000 → PPF (₹60,000/year)

   • Zero-risk guaranteed returns
   • Completely tax-free
   • Government backing
   • Role: Stable foundation

3. ₹5,000 → Children’s Mutual Fund SIP

   • Maximum growth potential
   • Beats inflation
   • Professional management
   • Role: Wealth multiplier

Expected Corpus After 15 Years (Conservative Estimates)

Component	Invested	Expected Return	Maturity Value
LIC	₹9,00,000	5.5%	₹13,50,000
PPF	₹9,00,000	7.1%	₹16,50,000
Mutual Fund	₹9,00,000	12%	₹25,00,000
TOTAL	₹27,00,000	–	₹55,00,000

After Tax: ~₹53 lakhs (tax only on MF gains)

Alternative Strategies by Budget

Budget: ₹5,000/month

Option A (Balanced):

• ₹2,500 → PPF
• ₹2,500 → Mutual Fund SIP

Option B (Growth-focused):

• ₹1,000 → PPF (minimum commitment)
• ₹4,000 → Mutual Fund SIP

Option C (Protection-focused):

• ₹3,000 → LIC Child Plan
• ₹2,000 → PPF

Budget: ₹10,000/month

Recommended Split:

• ₹3,000 → LIC (if you need insurance)
• ₹3,000 → PPF
• ₹4,000 → Mutual Fund SIP

Budget: ₹25,000+/month

Aggressive Strategy:

• ₹5,000 → LIC Child Plan
• ₹7,500 → PPF (₹90K/year)
• ₹12,500 → Mutual Fund SIP
• Consider: Sukanya Samriddhi Yojana (for girls), Gold ETF/SGBs

Age-Based Investment Mix

Child Age 0-5 (High Risk Capacity):

• 20% LIC/PPF (safe base)
• 80% Equity Mutual Funds (growth)

Child Age 6-10 (Moderate Risk):

• 30% LIC/PPF
• 70% Mutual Funds (60% equity, 40% hybrid)

Child Age 11-15 (Reducing Risk):

• 40% LIC/PPF
• 60% Mutual Funds (50% equity, 50% debt)

Child Age 16-18 (Goal Approaching):

• 60% PPF/Debt Funds
• 40% Equity (gradually exit equity)

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Common Mistakes Parents Make

❌ Starting too late: Beginning at age 10 vs birth reduces final corpus by 50-60%
❌ Putting all eggs in one basket: Only LIC or only MF
❌ Panic selling: Exiting mutual funds during market crash
❌ Ignoring inflation: 6% returns when education costs rise at 10%
❌ No life insurance: Investing without protecting income source
❌ Choosing wrong funds: High expense ratio or underperforming funds
❌ Irregular investments: Breaking SIP during tough months
❌ Not reviewing: Set-and-forget without annual review

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Frequently Asked Questions (FAQs)

General Questions

Q1: What is the best investment for a child’s future in India?

A: There’s no single “best” — it depends on your goals:

• Maximum safety: PPF (7.1%, tax-free, government-backed)
• Life insurance + savings: LIC Child Plans (guaranteed payouts + protection)
• Highest wealth growth: Mutual Funds (12-17% historical returns)
• Best overall: Combine all three in a layered approach

Q2: How much should I invest monthly for my child’s future?

A: Depends on your goal:

• For ₹25 lakhs in 15 years: ~₹5,500/month in mutual funds (12% CAGR)
• For ₹50 lakhs in 15 years: ~₹10,000/month in mutual funds (12% CAGR)
• For ₹1 crore in 18 years: ~₹12,000/month in mutual funds (12% CAGR)

Q3: Can I invest in LIC, PPF, and mutual funds together?

A: Yes! This is the smartest strategy. Allocate based on your budget:

• Small budget (₹5K): 50% PPF + 50% Mutual Fund
• Medium (₹15K): 33% each in LIC, PPF, MF
• Large (₹25K+): Customize based on risk appetite

LIC Questions

Q4: Which LIC policy is best for a newborn child in 2026?

A: Top choices:

• LIC New Children’s Money Back Plan: Milestone payouts at 18, 20, 22, 25
• LIC Jeevan Tarun: Lump sum at age 20 or 25 Both offer premium waiver and tax-free maturity.

Q5: What happens to my child’s LIC policy if I die?

A: With the premium waiver rider:

• All future premiums are waived (you don’t pay)
• Policy continues till maturity
• Child receives all benefits as scheduled
• This is LIC’s biggest advantage over pure investments

Q6: Is LIC better than mutual funds for child?

A: Depends on priority:

• Choose LIC if: You need life insurance + guaranteed returns
• Choose Mutual Funds if: You want maximum wealth growth
• Best: Combine both — LIC for protection, MF for growth

PPF Questions

Q7: Can I open PPF account for my newborn baby?

A: Yes! PPF can be opened for a minor of any age (even 1 month old). The parent/guardian operates it until the child turns 18.

Q8: What is the current PPF interest rate for 2026?

A: 7.1% per annum (compounded annually) for Q2 FY 2025-26. The government reviews rates quarterly.

Q9: PPF vs Sukanya Samriddhi Yojana — which is better for my daughter?

A:

• SSY: Higher rate (8.2%), but only for girls, matures at 21
• PPF: Lower rate (7.1%), but universal, matures at 15 years
• Recommendation: If you have a daughter, choose SSY for better returns

Q10: Can I withdraw PPF money before 15 years?

A: Limited options:

• Partial withdrawal: From 7th year onwards (50% of balance)
• Loan: Between 3rd-6th year (25% of balance)
• Premature closure: Generally not allowed except emergencies

Mutual Fund Questions

Q11: Which mutual fund is best for child education?

A: Top performers (2026):

1. HDFC Children’s Gift Fund (16% 5-yr CAGR)
2. ICICI Pru Child Care Fund (17% 5-yr CAGR)
3. SBI Magnum Children’s Benefit (15% 5-yr CAGR)

Choose based on risk appetite and fund performance review.

Q12: What is the minimum SIP amount for children’s mutual funds?

A: Most children’s funds allow:

• Minimum: ₹500-1,000/month
• No maximum limit
• Can increase/decrease anytime

Q13: Are mutual funds safe for child’s education fund?

A: Mutual funds carry market risk (value can fluctuate). However:

• Over 10+ years, equity funds historically delivered 12-15% returns
• Risk reduces with longer time horizon
• Professional fund management reduces individual stock risk
• Safe for long-term (10+ years) but not for short-term (< 5 years)

Q14: How to start SIP for my child?

A: Simple 4-step process:

1. Complete KYC (yours, not child’s)
2. Choose a children’s fund (HDFC, ICICI, SBI)
3. Set monthly SIP amount (₹500-1,000+)
4. Link bank account for auto-debit

Can be done online through fund websites or apps like Groww, Zerodha Coin, Paytm Money.

Tax Questions

Q15: Which child investment gives maximum tax benefits?

A: Tax comparison:

• LIC: 80C deduction + tax-free maturity (10(10D))
• PPF: 80C deduction + tax-free interest + tax-free maturity (EEE) — BEST
• Mutual Funds: No deduction, LTCG 10% above ₹1L

PPF offers maximum tax efficiency with triple exemption.

Comparison Questions

Q16: LIC vs PPF vs Mutual Funds — which gives highest returns?

A: Historical performance:

• LIC: 5-6% effective returns
• PPF: 7.1% (current rate)
• Mutual Funds: 12-17% (historical CAGR, not guaranteed)

Mutual funds offer highest returns but with market risk.

Q17: Is it better to invest ₹1,50,000 yearly in PPF or ₹12,500 monthly SIP?

A:

₹1.5L yearly in PPF for 15 years:

• Total: ₹22.5L invested
• Returns at 7.1%: ₹40-42L

₹12,500 monthly SIP (₹1.5L yearly) for 15 years:

• Total: ₹22.5L invested
• Returns at 12%: ₹62-65L

SIP wins if you can handle market volatility. But combining both is smartest.

Q18: Should I withdraw my LIC policy and invest in mutual funds?

A: Evaluate carefully:

Keep LIC if:

• You need the life insurance coverage
• Policy is more than 5 years old
• You value guaranteed, tax-free payouts

Consider switching if:

• It’s a traditional endowment plan giving < 5% returns
• You have separate term insurance
• You’re early in the policy (< 3 years)

Best approach: Keep LIC for protection + start new SIP for growth

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Real Success Story: Layered Investment Approach

Meet Sharma Family (Mumbai)

• Parents: Rahul & Priya Sharma
• Child: Aarav (born 2020)
• Combined Income: ₹12 lakh/year
• Investment Budget: ₹15,000/month

Their Strategy (Started when Aarav was 1 year old):

1. ₹5,000/month → LIC Jeevan Tarun

   • Sum Assured: ₹10 lakhs
   • Premium waiver included
   • Maturity: Age 25

2. ₹5,000/month → PPF (₹60,000/year)

   • Opened minor PPF account
   • Deposited ₹60K annually
   • Transferred to Aarav at 18

3. ₹5,000/month → HDFC Children’s Gift SIP

   • Started with ₹5K
   • Step-up: Increasing 10% annually
   • Portfolio review every year

Projected Corpus at Age 18 (2038):

Investment	Amount Invested	Expected Value
LIC Jeevan Tarun	₹10,80,000	₹18-20 lakhs
PPF	₹10,80,000	₹22-24 lakhs
HDFC MF SIP	₹10,80,000 + step-ups	₹45-50 lakhs
Total Corpus	~₹35 lakhs	₹85-95 lakhs

How they’ll use it:

• Age 18: LIC money back → College admission fees
• Age 18-22: PPF partial withdrawals → Yearly college expenses
• Age 22: Mutual fund redemption → Master’s degree abroad / business setup

Their Advice: “We don’t worry about which is ‘best’ — we use all three for different purposes. LIC is our insurance, PPF is our peace of mind, and mutual funds are building Aarav’s future wealth.”

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Action Plan: Start Your Child’s Investment Journey Today

Step 1: Assess Your Current Situation

✅ Monthly investible surplus: ₹_______
✅ Risk appetite: Low / Medium / High
✅ Child’s age: ______ years
✅ Time to goal (college): ______ years
✅ Existing investments for child: Yes / No

Step 2: Choose Your Investment Mix

Based on your situation, select:

Conservative (Low Risk):

• 30% LIC Child Plan
• 50% PPF
• 20% Debt/Hybrid Mutual Funds

Balanced (Moderate Risk):

• 25% LIC Child Plan
• 35% PPF
• 40% Hybrid/Equity Mutual Funds

Aggressive (High Risk, High Return):

• 15% LIC/PPF
• 85% Equity Mutual Funds

Step 3: Start Small, Scale Up

Don’t wait for “enough money”:

• Start with ₹500-1,000/month
• Increase by 10% yearly (step-up SIP)
• Add windfalls (bonus, tax refund)

Step 4: Set Up Auto-Pilot

Make it automatic:

• Auto-debit for SIP on salary date
• Annual PPF deposit reminder
• LIC premium auto-pay

Step 5: Review Annually

Once a year (on child’s birthday):

• Check fund performance
• Rebalance if needed
• Increase SIP amount
• Review goal progress

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Final Verdict: LIC vs PPF vs Mutual Funds for Your Child

If you remember only ONE thing from this guide:

The best investment for your child is the one you START TODAY and CONTINUE CONSISTENTLY.

A “perfect” strategy started 5 years late will always lose to a “good enough” strategy started today.

Our Recommendation

For most Indian parents, the ideal approach is:

🏆 25-30% in LIC Child Plan (protection)
🏆 30-35% in PPF (tax-free safety)
🏆 35-45% in Mutual Fund SIP (growth)

This gives you:

• ✅ Life insurance if something happens to you
• ✅ Guaranteed tax-free returns from PPF
• ✅ Inflation-beating wealth creation from equity
• ✅ Balanced risk profile
• ✅ Diversified corpus

The Time to Start is NOW

• Every month you delay = ₹50,000+ less corpus at age 18
• Compounding needs TIME more than MONEY
• Your child’s future doesn’t wait for “perfect” market conditions

Next Steps:

1. Open a PPF account this week
2. Start a ₹1,000 SIP in a children’s fund
3. Get LIC child plan quote if you need insurance
4. Review and increase every year

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Disclaimer

This article is for educational and informational purposes only. It does not constitute financial, investment, or legal advice. Investment products are subject to market risks. Please read all scheme-related documents carefully.

Sources & Data:

• PPF rates: Ministry of Finance notifications (Q2 FY 2025-26)
• Mutual fund data: Value Research, fund house disclosures (as of Jan 2026)
• LIC policy details: Official LIC website and policy documents
• AUM figures: AMFI monthly reports (Nov 2025)

Share this guide with every new parent you know. Financial literacy is the best gift you can give to the next generation.