LIC’s New Children’s Money Back Plan(932) Review – Should You Invest?

“The love of a parent knows no bounds. They sacrifice their own dreams to make their children’s come true.”

We understand that as a parent, you toil every day to create a corpus for your children that will help them achieve their dreams in the future. You work hard today, dreaming of creating a better tomorrow for your children.

But, what should be done to bear the fruit of your hard work?

Investment! It is the most important factor in securing the future of your children.
Is investment alone enough?

Investing in the right place at the right time is the way forward.

LIC New Children’s Money Back Policy is a child Insurance plan that offers payout at different stages of your child’s life.

Will this be the ideal plan that meets the factors mentioned above?

What are the Advantages(pros) and Disadvantages(cons) of LIC’s New Children’s Money Back Plan?

Let’s review the LIC’s New Children’s Money Back Plan to find out whether this is a Good or Bad option to make your child’s future safe and secure.

Let’s get started!

Table of Contents

1.) What is LIC’s New Children’s Money Back Plan?
2.) What are the Features of LIC’s New Children’s Money Back Plan?
3.) Who is eligible for LIC’s New Children’s Money Back Plan?
4.) What are the Benefits of LIC’s New Children’s Money Back Plan? Review in Detail
5.) The Grace Period, Paid-up Policy, and Revival of LIC’s New Children’s Money Back Plan
6.) Free-Look Period of LIC’s New Children’s Money Back Plan
7.) Surrendering LIC’s New Children’s Money Back Plan
8.) What are the advantages of LIC’s New Children’s Money Back Plan?
9.) What are the disadvantages of LIC’s New Children’s Money Back Plan?
10.) Research Methodology of LIC’s New Children’s Money Back Plan – A Comprehensive Analysis

•  Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) Analysis of LIC’s New Children’s Money Back Plan

11.) LIC’s New Children’s Money Back Plan vs OtherInvestment Options

• LIC’s New Children’s Money Back Plan vs Tax-efficient Investments
• LIC’s New Children’s Money Back Plan vs Systematic Investment Plans (SIPs)
• LIC’s New Children’s Money Back Plan vs Sukanya Samriddhi Yojana (SSY)
• LIC’s New Children’s Money Back Plan vs Fixed Deposits
• LIC’s New Children’s Money Back Plan vs SBI Life Insurance Child Plan – Smart Scholar
• LIC’s New Children’s Money Back Plan vs ICICI Pru Smart Kid Solution

12.) LIC’s New Children’s Money Back Plan vs Other Investment Options – Review Conclusion
13.) Final Verdict on LIC New Children’s Money Back PolicyLIC’s New Children’s Money Back Policy – Good or Bad Investment Option?

1.) What is LIC’s New Children’s Money Back Plan?

This is a money-back plan for individual life insurance that is non-linked and participatory. Through Survival Benefits, this plan is specifically created to address the needs of growing children in the areas of school, marriage, and other areas. Furthermore, it offers risk coverage for a child’s life during the duration of the insurance.
Please refer to the official brochure of LIC’s New Children’s Money Back Plan (932) for more policy details.

2.) What are the Features of LIC’s New Children’s Money Back Plan?

• It provides life cover for the child during the policy term.
• The plan can be purchased by any of the parents or grandparents for a child aged 0 to 12 years.
• Policy term and premium paying term depend on the entry age of the child.
• The final Maturity Value is available at the age of 25 years.

3.) Who is eligible for LIC’s New Children’s Money Back Plan?

Minimum Age at Entry	0 years
Maximum Age at Entry	12 years
Minimum/ Maximum Maturity Age	25 years
Policy Term/Premium Paying Term	25 years – Age at entry
Minimum Basic Sum Assured	₹ 1 Lakh
Maximum Basic Sum Assured	No Limit

4.) What are the Benefits of LIC’s New Children’s Money Back Plan? Review in Detail

i.) Death Benefit

On death of the Life Assured during the policy term provided the policy is in force, the following Death Benefit is payable to the nominee
“Sum Assured on Death” along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any, shall be payable. Where “Sum Assured on Death” is defined as Higher of

• Basic Sum Assured or
• 7 times of annualized premium
• This Death Benefit shall not be less than 105% of the total premiums paid up to the date of death.

ii.) Survival Benefit

On the Life Assured surviving on each of the LIC’s New Children’s Money Back policy anniversaries coinciding with or immediately following the completion of ages 18 years, 20 years, and 22 years, the basic Sum Assured of 20% calculated on each occasion will be paid.

iii.) Maturity Benefit

On Life Assured surviving the LIC’s New Children’s Money Back policy term, provided the policy is in force, “Sum Assured on Maturity” along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any, shall be payable; where Sum Assured on Maturity is equal to 40% of the Basic Sum Assured.

iv.) Participation in Profits

The LIC’s New Children’s Money Back policy shall participate in the profits of the Corporation and shall be entitled to receive Simple Reversionary Bonuses declared as per the experience of the Corporation, provided the LIC’s New Children’s Money Back policy is in -force.
Final Additional Bonus may also be declared under LIC’s New Children’s Money Back policy in the year when the policy results in a claim either by death or maturity.

5.) The Grace Period, Paid-up Policy, and Revival of LIC’s New Children’s Money Back Plan

Grace period

In LIC’s New Children’s Money Back Plan, a Grace Period of 30 days shall be allowed for payment of yearly half-yearly, or quarterly premiums, and monthly premiums have 15 days from the date of the first premium which is not paid.

Paid-up Policy

If less than two years’ LIC’s New Children’s Money Back Plan premiums have been paid, and any subsequent premium be not duly paid, all the benefits under the LIC’s New Children’s Money Back Policy shall cease after the expiry of the grace period from the date of first unpaid premium and nothing shall be payable.
If after at least two full years’ LIC’s New Children’s Money Back Plan premiums have been paid and any subsequent premiums are not duly paid, the LIC’s New Children’s Money Back Policy shall not be wholly void but shall continue as a paid-up policy till the end of the policy term.

Revival

A lapsed LIC’s New Children’s Money Back Policy can be revived within a period of 5 consecutive years from the date of the first unpaid premium.

6.) Free-Look Period of LIC’s New Children’s Money Back Plan

If a LIC New Children’s Money Back Policyholder is not satisfied with the “Terms and Conditions”, he/she can return the policy within 15 days from the date of receipt of LIC’s New Children’s Money Back Policy bond by stating the reasons for returning the policy.

7.) Surrendering LIC’s New Children’s Money Back Plan

As long as all two full years’ payments have been paid, the LIC’s New Children’s Money Back policy can be canceled whenever you want. On surrender of the policy, the Corporation shall pay the Surrender Value equal to higher of Guaranteed Surrender Value or Special Surrender Value.

8.) What are the advantages of LIC’s New Children’s Money Back Plan?

• Survival Benefits can be deferred.
• The rider option enhances the cover.
• option to receive Death Benefits in installments over the chosen period of 5,10, or 15 years instead of a lump sum amount.
• Under the Settlement Option, you can receive Maturity Benefits in installments.
• Rebate for High Sum assured.
• The loan can be availed and the maximum loan amount is 90% of the surrender value.

9.) What are the disadvantages of LIC’s New Children’s Money Back Plan?

• The Maturity Benefit is receivable only at a specified age i.e., 25 years.
• Life cover is offered for the child and not for the parent. Generally, all child plans offer life cover for parents.
• There might be a mismatch between the Survival Benefit and the actual requirement.

10.) Research Methodology of LIC’s New Children’s Money Back Plan – A Comprehensive Analysis

LIC’s New Children’s Money Back Policy offers life cover for the child and regular payout at predefined intervals. Though the Survival Benefits are guaranteed, the investment return calculation helps to figure out the suitability. The LIC’s New Children’s Money Back Policy sales brochure has a benefit illustration. Now, we shall do the Internal Rate of Return calculation using these figures.

Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) Analysis of LIC’s New Children’s Money Back Plan

A parent of a 12-year-old child opts for LIC’s New Children’s Money Back Policy for a Sum Assured of ₹ 1 Lakh. The Policy Term is 13 years. The annualised premium is ₹ 9,202.

Child	12 years
Sum Assured	₹ 1 Lakh
Policy Term	13 years
Premium Paying Term	13 years
Annualised premium	9,202

The kid is eligible for three Survival Benefits of ₹ 20,000 each and the balance of ₹ 40,000 at maturity. The Maturity Value differs based on the bonus.

In preparing this benefit illustration, it is assumed that the Projected Investment Rate of Return that LICI will be able to earn throughout the term of the LIC’s New Children’s Money Back policy will be 4% p.a. or 8% p.a., as the case may be.

The Projected Investment Rate of Return is not guaranteed and they are not the upper or lower limits of what you might get back as the value of your LIC’s New Children’s Money Back policy is dependent on several factors including actual future investment performance.

Age	Year	At 4% p.a.		At 8% p.a.
		Annualised premium / Maturity Benefit	Death Benefit	Annualised premium / Maturity Benefit	Death Benefit
12	1	-9,202	1,00,000	-9,202	1,00,000
13	2	-9,202	1,00,000	-9,202	1,00,000
14	3	-9,202	1,00,000	-9,202	1,00,000
15	4	-9,202	1,00,000	-9,202	1,00,000
16	5	-9,202	1,00,000	-9,202	1,00,000
17	6	-9,202	1,00,000	-9,202	1,00,000
18	7	10,798	1,00,000	10,798	1,00,000
19	8	-9,202	1,00,000	-9,202	1,00,000
20	9	10,798	1,00,000	10,798	1,00,000
21	10	-9,202	1,00,000	-9,202	1,00,000
22	11	10,798	1,00,000	10,798	1,00,000
23	12	-9,202	1,00,000	-9,202	1,00,000
24	13	-9,202	1,00,000	-9,202	1,00,000
25		50,400	1,00,000	75,100	1,00,000
	IRR	-1.88%		2.53%

The Final Maturity Value under the 4% scenario is ₹ 50,400. The IRR calculation results in a negative. You should understand that the reason for this is that the “cash outflow is more than the cash inflow”. In other words, the premium paid by you is more than the benefit you receive.

The total premium paid is ₹ 1.19 Lakhs. But the total guaranteed survival and Maturity Benefit is just ₹ 1 Lakh. If there is any accrued bonus, it will be paid. As the bonuses are non-guaranteed, there is a negative cash flow.

The Final Maturity Value under the 8% scenario is ₹ 75,100. The IRR calculation results in 2.53%.
So, what we can learn from this?

Even if you park your money simply in your savings bank account, the money is readily available to you and it fetches more returns than LIC New Children’s Money Back Policy.

The IRR analysis shows that investing in LIC Children’s New Money Back Policy results in a deficit in your cash flow unless the plan declares a decent bonus. Even if the plan declares a decent bonus, it is difficult to cope with the soaring education inflation of 10-12% p.a.

The Investment return under LIC’s New Children’s Money Back Policy is like a drop in the ocean compared to the required hefty corpus.

Okay, so now let’s look at some of the alternate investment options for LIC’s New Children’s Money Back Plan!

11.) LIC’s New Children’s Money Back Plan vs Other Investment Options

Preparing for the financial goals related to a child’s education involves careful planning and selecting appropriate investment options.

What are the steps to achieve this?

• The first step is to clearly outline your child’s educational goals and estimate the required cost. Make sure to calculate the number of years left to earn that cost.
• Understand the magic of compounding. Yes! Take advantage of compounding by starting your investments early.

• Don’t forget Asset Allocation! It is always wise to spread your investments across various asset classes, such as stocks, bonds, mutual funds, and fixed deposits, to reduce risk and optimize returns.

The following are the alternate investment options to the child Insurance plan.

i) LIC’s New Children’s Money Back Plan vs Tax efficient investments:

Explore tax-saving investment options, like the Public Provident Fund (PPF) and Equity-Linked Savings Schemes (ELSS), which offer tax benefits and can be used for funding education.

ii) LIC’s New Children’s Money Back Plan vs Systematic Investment Plans (SIPs):

Consider investing in mutual funds through SIPs, allowing you to invest a fixed amount regularly. This approach helps manage market volatility.

iii) LIC’s New Children’s Money Back Plan vs Sukanya Samriddhi Yojana (SSY):

If you have a daughter, the SSY is a government-backed scheme that provides a higher interest rate and tax benefits. It’s designed to meet the expenses of a girl child’s education and marriage.

iv) LIC’s New Children’s Money Back Plan vs Fixed Deposits:

Traditional fixed deposits in banks provide a stable and secure option for a portion of your investment portfolio. While the returns may be moderate, they offer capital protection.
The table here depicts that there are better investment options that fetch returns much higher than LIC New Children’s Money Back Policy.

Particulars	Potential Returns
Nifty 50 TRI (10-Year Return)	13.08%
SandP BSE 500 TRI (10-Year Return)	14.72%
Equity Mutual Fund: Large Cap (10-year Avg)	8.20%
Equity Mutual fund: Multi Cap (10-year Avg)	15.34%
Equity Mutual Fund: ELSS (10-year Avg)	10.79%
FD Returns	6%-7%
RBI Floating Rate Bond	8.05%
Post Office Small Saving Schemes
5-year RD	6.70%
PPF	7.10%
5-year Time deposit	7.50%
National savings Certificate	7.70%
Sukanya Samridhi	8%

v) LIC’s New Children’s Money Back Plan vs SBI Life Insurance Child Plan – Smart Scholar

Let’s look at some of the features of the SBI Life Insurance Child Plan – Smart Scholar,

• It provides both market-linked earnings and insurance coverage.
• The policy benefits would remain for the time that you can pay premiums.
• Integrated premium waiver to guarantee the continuation of your coverage.

You can read the review of the SBI Life Insurance Child Plan – Smart Scholar here for more interesting details and analysis of the Good and bad aspects.
LIC’s New Children’s Money Back Plan vs ICICI Pru Smart Kid Solution
Let’s look at some of the features of the ICICI Pru Smart Kid Solution,

• Pay the premium that suits your needs. Limited, Regular, and Single Pay
• Select the level of safety that best suits your requirements.
• There are 14 fund alternatives and two portfolio strategies.

You can read the review of the ICICI Pru Smart Kid Solution here for more interesting details and an analysis of the Advantages(pros) and Disadvantages(cons) of the plan.

12.) LIC’s New Children’s Money Back Plan vs Other Investment Options – Review Conclusion

We already proved from the IRR analysis that, LIC’s New Children’s New Money Back Policy offers an investment return that pales in comparison to the substantial corpus that is necessary for your children. This holds true even after comparison with all other investment options.

13.) Final Verdict on LIC’s New Children’s Money Back Policy – Good or Bad Investment Option?

In general, child insurance policies offer life cover for the parent i.e., the Parent will be the primary policyholder. In the unfortunate event of the policyholder’s demise, child insurance plans ensure that the child’s future financial needs are met. Even these policies will not give you good returns because the insurance and investment component is mixed.

On the other hand, LIC’s New Children’s Money Back Policy offers life protection for the child. The proceeds from the life insurance policy will replace the income of the deceased person. So, life insurance coverage for a child is totally unnecessary. The purpose of a life insurance policy is defeated in LIC’s New Children’s Money Back Policy.

So, there are three factors Under the plan which make it unattractive,

1. life cover for the child

2. A mix of insurance and investment

3. A high agent commission reduces the overall return.

All these factors make the return on investment negative unless the plan declares a decent Bonus.

On the whole, investing in LIC’s New Children’s Money Back Policy will not be beneficial from any perspective. Simply, do not buy any readymade child education plans. This is not a one-stop solution for your child’s dream.

Consider your risk tolerance before choosing between traditional and market-linked products. Instead of searching for investment strategies on social media sites like Quora, Facebook, Twitter, etc, to develop a customized plan based on your unique objectives and financial circumstances, speak with a financial expert.