As a parent, you know exactly when the big expenses hit: college admission at 18, postgraduate education at 20, maybe a professional course or wedding preparations at 22, and finally marriage or career setup at 25. What if you could ensure money is available at each of these exact ages, without having to time withdrawals from investments or worry about market conditions? That’s precisely what LIC New Children’s Money Back Plan does, it delivers cash at ages 18, 20, 22, and 25, automatically, guaranteed, right when your child needs it.
What Is LIC New Children’s Money Back Plan?
LIC New Children’s Money Back Plan (Plan 932) is a child-focused insurance plan that combines life protection with strategically timed cash payouts. Think of it as a financial runway for your child’s most important years – from college entrance to marriage.
Here’s how it works:
Age 18: Child receives 20% of sum assured (college admission, undergraduate expenses) Age 20: Another 20% (postgraduate education, higher studies) Age 22: Another 20% (professional courses, marriage preparation, career start) Age 25: Final 40% plus all accumulated bonuses (marriage, business startup, house down payment)
Throughout this entire journey, your child has life insurance coverage. And if you add the Premium Waiver Benefit rider, the plan continues even if something happens to you, ensuring your child’s financial future regardless of what life throws your way.
The Timeline: How Money Flows to Your Child
Let’s see this in action with a real example:
Meet little Aarav, currently 3 years old.
His parents start LIC New Children’s Money Back Plan with ₹10 lakh sum assured.
What Happens Over the Next 22 Years:
Age 3-25 (22 years): Parents pay premiums every year (they can choose yearly, half-yearly, quarterly, or monthly via auto-debit)
Age 18 (Undergraduate admission): Aarav receives ₹2 lakhs (20% of ₹10 lakhs)
- Perfect timing for college admission fees, first-year hostel deposit, laptop purchase
Age 20 (Postgraduate planning): Aarav receives another ₹2 lakhs
- Covers entrance exam coaching, postgraduate admission, study abroad deposits
Age 22 (Career/Marriage preparation): Another ₹2 lakhs comes in
- Professional certification courses, marriage planning begins, or career setup
Age 25 (Maturity – Marriage/Career Launch): Aarav receives ₹4 lakhs (40% of sum assured) PLUS all accumulated bonuses over 22 years
- Let’s say bonuses total ₹6 lakhs → Total maturity amount: ₹10 lakhs
- This substantial corpus funds his wedding, house down payment, or business startup
Total received: ₹16 lakhs (₹2L + ₹2L + ₹2L + ₹10L) from a sum assured of ₹10 lakhs
The bonuses are what make the difference, turning your basic ₹10 lakh coverage into ₹16+ lakhs in total benefits.
Understanding the Bonus Structure
Since this is a “participating” plan, you share in LIC’s profits through bonuses added to your policy.
Simple Reversionary Bonuses
These are declared by LIC periodically (typically annually) and added to your policy. Once declared and added, they’re yours permanently – they vest immediately.
Example: If LIC declares ₹50 per ₹1,000 of sum assured as bonus:
- On ₹10 lakh sum assured = ₹50,000 added that year
- Over 20 years, these bonuses accumulate substantially
Final Additional Bonus
At maturity (age 25), LIC may declare a one-time final additional bonus based on the plan’s overall performance. This is the cherry on top, significantly boosting your final payout.
Important to understand: Bonuses aren’t guaranteed in advance, they depend on LIC’s investment performance. However, LIC has a long track record of declaring bonuses consistently on child plans. Once declared and added to your policy, they become guaranteed.
The Life Cover Component
While the money-back payouts are great, remember this is still life insurance. Your child is covered throughout the policy term.
If Something Happens to the Child (God Forbid)
If the child passes away during the policy term, the nominee (parent/guardian) receives:
Sum Assured on Death = Higher of:
- Basic Sum Assured (₹10 lakhs in our example), OR
- 7 times the annual premium
Plus:
- All bonuses accumulated till date
- Final additional bonus (if applicable)
Minimum guarantee: You’ll never receive less than 105% of all premiums you’ve paid
Critical point: Survival benefits already paid are NOT deducted from the death benefit. So even if your child received money at 18 and 20 before passing away at 21, the full death benefit is still paid.
The Premium Waiver Benefit – The Most Important Rider
Here’s where smart planning really shines. The Premium Waiver Benefit rider is optional but absolutely essential for this plan.
How It Works:
The rider is taken on the parent/proposer’s life, not the child’s.
If the parent (you) dies or becomes totally disabled:
- All future premiums are waived – you don’t need to pay anymore
- BUT the child’s policy continues with full benefits
- Child still receives money at ages 18, 20, 22, and 25
- Life cover on child continues
- Bonuses continue to be added
Why this matters: Imagine the worst scenario – you pass away when your child is 10. Without this rider, your family would struggle to continue paying premiums, potentially losing all benefits. WITH this rider, your child’s entire financial plan stays intact automatically.
Cost: Minimal additional premium, massive peace of mind
Recommendation: Unless you have some exceptional reason, ALWAYS add the Premium Waiver Benefit rider. This is what converts a good plan into a bulletproof plan.
Who Should Seriously Consider This Plan?
1. Parents Who Love Structure and Timing
If you’re the type who thinks, “I’ll invest in mutual funds and withdraw when needed,” but worry about:
- Market being down when you need to withdraw at 18
- Forgetting to start withdrawals at the right time
- Being tempted to use the money for something else
This plan removes all that uncertainty. Money appears at ages 18, 20, 22, and 25, automatically, guaranteed. No decisions, no timing, no market risk.
2. Conservative Savers Who Dislike Market Volatility
Some parents lose sleep watching their child’s education fund fluctuate with the stock market. If that’s you, LIC New Children’s Money Back Plan offers peace of mind:
- Guaranteed sum assured
- Bonuses added on top (not guaranteed upfront but historically consistent)
- No market linkage whatsoever
- Completely predictable cash flows
You might sacrifice some potential upside, but you eliminate all downside risk.
3. Parents Who Want Insurance + Savings in One
Instead of managing:
- Separate term insurance on child
- Separate investment plan for education
- Tracking and rebalancing
- Multiple premium payments
You get everything in one policy:
- Life cover on child
- Structured payouts at key ages
- Bonuses for growth
- Single premium payment
For busy parents who value simplicity, this integration is worth a lot.
4. Those Who Value LIC’s Credibility
LIC has been managing child plans for decades with a strong claim settlement record. For families who trust institutional stability over potentially higher returns from newer options, this matters.
The “sleep at night” factor of knowing your child’s future is with LIC can’t be quantified in IRR calculations, but it’s real for many families.
5. Families Where Premium Waiver Is Critical
If you’re the sole earning member and there’s no backup financial security for your family, the Premium Waiver Benefit makes this plan uniquely valuable. It ensures your child’s plan continues no matter what happens to you.
Understanding the Age and Entry Details
Child’s Age When You Start:
- Minimum: 0 years (you can start right at birth or after 30 days)
- Maximum: 12 years (last birthday)
Why starting early is better:
- Lower premiums (child is younger)
- More years for bonuses to accumulate
- Longer coverage period
- Forces early financial discipline
Example: Start at age 3 → 22 years of premium payment and bonus accumulation Start at age 10 → Only 15 years → Less time for bonuses to compound
Policy Term: Always designed to mature at age 25 (fixed)
- Start at age 0 → 25-year term
- Start at age 5 → 20-year term
- Start at age 10 → 15-year term
Sum Assured:
- Minimum: ₹1 lakh (though realistically, ₹5-10 lakhs makes more sense given today’s education costs)
- Maximum: No limit, subject to underwriting
Premium Payment Flexibility
You can choose how you want to pay:
Yearly: Pay once a year, get small discount (mode rebate) Half-yearly: Pay every 6 months Quarterly: Pay every 3 months Monthly: Auto-debit from bank account via NACH/ECS
Pro tip: Annual payment is usually cheapest due to mode rebates, but choose what fits your cash flow comfort. Missing payments can lapse the policy, so pick a frequency you can maintain consistently.
What If Life Changes? (Loans, Surrender, Paid-Up)
Policy Loan
After the policy acquires surrender value (usually after 2-3 years of premium payment), you can take a loan against it.
Good for:
- Emergency expenses
- Short-term financial needs
- Avoiding policy surrender
The policy continues, bonuses keep getting added, but you get immediate cash. You pay interest on the loan.
Surrender
If you can’t continue premiums and surrender the policy, you get the surrender value. However:
- Early surrender (before 3-4 years) gives very little back
- You lose all future benefits
- Bonuses not yet vested are lost
- Not recommended unless absolutely unavoidable
Paid-Up Policy
If you’ve paid at least a few years’ premiums and then stop, the policy becomes “paid-up” with reduced benefits:
- You don’t pay anymore
- You still get survival benefits and maturity, but at reduced amounts
- Better than surrender, but still not ideal
Bottom line: This is a long-term commitment. Only start if you can reasonably commit to paying premiums throughout.
The Honest Truth About Returns
Let’s talk numbers realistically. LIC New Children’s Money Back Plan isn’t designed to give you 12-15% returns. It’s designed to give you certainty, structure, and insurance.
Typical returns: Around 5-7% IRR depending on bonuses declared over the years
Is this good?
Compared to equity mutual funds (12-15%): Lower, but zero market risk Compared to PPF (7.1% tax-free): Similar, but includes life cover and structured payouts Compared to term insurance + mutual funds combo: Could be lower, but eliminates decision fatigue
The real value isn’t just IRR:
- Money arrives exactly when needed (no withdrawal timing risk)
- Life cover included
- Premium waiver protection
- Guaranteed component (sum assured)
- Simplicity (one product, not managing multiple)
- Tax benefits (premiums under 80C, maturity under 10(10D))
For many parents, especially conservative ones, this value package is worth accepting a lower IRR.
Tax Benefits – The Icing on the Cake
On Premiums (Section 80C)
Premiums paid can qualify for tax deduction up to ₹1.5 lakhs per year, reducing your taxable income.
Impact: If you’re in 30% tax bracket, ₹1.5 lakh deduction saves ₹46,500 in taxes annually.
On Maturity/Survival Benefits (Section 10(10D))
The money received at ages 18, 20, 22, and 25 is typically tax-free, subject to conditions.
Impact: If your child receives ₹16 lakhs total, it comes without any income tax deductions (assuming conditions are met).
Caveat: Tax laws change. Always verify current rules with a tax advisor. Recent amendments have introduced premium limits for 10(10D) exemption, so check applicability.
Common Questions Parents Ask
“Should I start this for my newborn or wait?” Start early. Lower premiums, more bonus accumulation time, better long-term value.
“₹1 lakh minimum seems low. How much should I actually take?” Consider realistic education costs. ₹5-10 lakh minimum makes sense; ₹15-25 lakh for comprehensive coverage. Remember 20% at age 18 should meaningfully help with college.
“Can I take multiple policies on my child?” Yes, but ensure total coverage makes sense and you can afford combined premiums comfortably.
“What if my child doesn’t need money at 18? Can I defer?” The payouts happen automatically at policy anniversaries. You can receive and reinvest if not needed immediately, but can’t defer within the policy.
“Is Premium Waiver Benefit worth the extra cost?” Absolutely yes. It’s the single most important feature, especially if you’re the sole earner.
Making Your Decision: A Framework
Before committing to LIC New Children’s Money Back Plan, ask yourself:
- Can I pay premiums consistently for 13-25 years? (depending on child’s current age)
- Am I comfortable with 5-7% kind of returns in exchange for certainty?
- Do the payout ages (18, 20, 22, 25) align with my child’s expected needs?
- Have I compared this with “term insurance + mutual fund SIP” alternative?
- Am I okay with non-liquid money locked till these specific ages?
- Will I definitely add the Premium Waiver Benefit rider?
- Is my sum assured realistic for future education/marriage costs?
If you answer “yes” to most of these, this plan can be an excellent choice.
Next Steps
- Get a detailed illustration from a licensed LIC agent showing:
- Exact premiums for your child’s age and chosen sum assured
- Projected bonuses and maturity values
- Premium Waiver Benefit cost
- Surrender values year-by-year
- Calculate the IRR – Know exactly what returns you’re getting
- Compare alternatives:
- Pure term insurance on child + SIP in mutual funds
- Other LIC child plans (Jeevan Tarun, etc.)
- Child ULIPs from other insurers
- Decide on sum assured – Don’t underinsure; education costs are high
- Add Premium Waiver Benefit – Make this non-negotiable
- Review documents – Read the sales brochure, Customer Information Sheet, and policy document thoroughly
Important Disclaimer: This guide helps you understand LIC New Children’s Money Back Plan better and whether it suits your family’s needs. However, financial planning for children is deeply personal and should be based on your unique situation, goals, and financial capacity.
For accurate premium quotes, current bonus rates, projected maturity values, complete terms and conditions, exclusions, and personalized advice based on your child’s age and your financial situation, please consult a licensed LIC advisor and refer to official LIC documentation.
Product features, bonus declarations, and tax laws are subject to change. Always verify current information before making a commitment.
The best plan for your child is one that you can maintain consistently, that aligns with their actual future needs, and that gives you confidence and peace of mind. LIC New Children’s Money Back Plan is powerful for parents seeking structured, guaranteed payouts at critical ages, but only when it’s the right fit for your family.
Money at 18, 20, 22, and 25. Protection throughout. That’s the promise of LIC New Children’s Money Back Plan. Simple, structured, and stress-free.