It is a common practice to receive inflows in installments from child plans towards the end of the term. What investors would find interesting is the fact that it is possible to pay lower premiums and yet receive higher amounts on maturity. The secret lies in taking more than one policy i.e. if the sum assured you were looking at was Rs 100,000, then opting for five policies of Rs 20,000 each over five different tenures will do the trick. Let us use an illustration to better understand the same.

Mr. X who is presently 31 years old wishes to opt for a child plan for his 3 year old daughter; the sum assured is Rs 2,50,000 for a 20 year term.

Now instead of opting for a single child plan for the required sum assured that will entail high premiums, Mr. X can opt for 5 policies of Rs 50,000 each. A smart choice would be the children's plan offered by HDFC Standard Life Insurance with the double benefit option. Since the proposed plan offers a single cash flow to the policy holder on maturity, the chosen plans should be of varying tenures to bring them on par with other child plans.

Sum Assured (Rs)	Term (yrs)	Child's age	Annual premium (Rs)	Total premium (Rs)
50,000	16	19	3,244	51,904
50,000	17	20	3,042	51,714
50,000	18	21	2,862	51,516
50,000	19	22	2,700	51,300
50,000	20	23	2,554	51,080
				257,514

Conventional child plans offer returns in 4-5 installments comprised of a percentage of the sum assured and bonus. To better understand the working let us consider two child plans offered by insurance companies P and L respectively.

Insurance Co. P Sum Assured Rs 250,000 Term 20 years Annual premium Rs 14,004 Total premium Rs 280,080

Insurance Co. L Sum Assured Rs 250,000 Term 20 years Annual premium Rs 13,620 Total premium Rs 272,400

Clearly opting for more than one policy has helped the policy holder by saving on the premium amount paid. Another interesting feature is that with varying terms the premium amount reduces progressively from the 16th year. Now for the other aspect, which most policy seekers are keenly interested in i.e. returns on maturity. Since the bonus is an integral part of the maturity proceeds, they have been computed assuming a rate of 6% for all the policies.

	HDFC Life		Co. P		Co. L
Term (yrs)	Amt (Rs)	Components	Amt (Rs)	Components	Amt (Rs)	Components
16	108,000	SA+Bonus	62,500	25%of SA	NIL	NA
17	111,000	SA+Bonus	50,000	20%of SA	62,500	25%of SA
18	114,000	SA+Bonus	50,000	20%of SA	62,500	25%of SA
19	117,000	SA+Bonus	50,000	20%of SA	62,500	25%of SA
20	120,000	SA+Bonus	326,881	20%of SA+B.	362,500	25%of SA+B.
	570,000		539,381		550,000

The numbers say it all! Despite having paid lower premiums, policy holders can receive higher returns by opting for more than one policy. So go ahead and get that child plan, its like having your cake and eating it too!