Sukanya Samriddhi Yojana vs. Life Corporation of India

When it comes to long term investment schemes in India, the options are many.  While we ponder over thousands of options and plans we have, we are often confused.  However, the basic lies in the fact that every investment scheme comes with some advantages as well as drawbacks.

Each long term investment scheme has its own objective and thus, while choosing one for ourselves, we would make sure that the objective of the scheme is in line with our personal objective.

In this article, we would compare two popular schemes in India, i.e. Sukanya Samriddhi Account and Life Corporation of India schemes.  Frankly, both Sukanya Samriddhi Account and Life Insurance could not really be compared to each other.  SSA can only be opened if you have a girl child below the age of 10 years, whereas, life insurance can be taken for anyone from any age group.

On one hand, SSA is for a specific target, i.e. securing the future of a girl child, whereas on the other hand, Life Insurance could be for anyone looking forward to secure their life and their families after they are no more.  Both are relevant and a common man should invest in both the investments wisely.

In terms of Rate of Interest

The rate of interests for both the schemes varies largely.  On one hand, Life Insurance offers an ROI of somewhere 5% to 7% and on the other Sukanya Samriddhi Account offers a high ROI of 9.2%, which is highest among all small saving long term schemes.

If you are looking for a high rate of interest for security of your girl child below the age of 10 years, then there is no alternative to SSA.  Also, since you can have just one SSA for your girl child, if your budget allows, you can have a life insurance too for your daughter.

In terms of Duration of Investment

The duration of investment normally ranges from 15 years to 20 years or above.  There are several schemes of life insurance being floated by companies and the duration of investment differs.

On the other hand, the duration of investment for SSA is at least 14 years and the returns can only be taken after the girl child reaches an age of 21 years or at the time of her marriage or higher education.

In terms of Proceed

In both the schemes, the proceed amount depend on how much you invest per year.  In life insurance plans, the amount of investment is fixed and so is the proceed and the life cover amount.

Whereas, in SSA there is a maximum and minimum amount of Rs 1,000 and Rs 1.5 lakh per annum, within which you can deposit any amount any number of times in the account.  Thus the proceeds in case of SSA would depend on what you have been investing over the period of investment.

In terms of Tax Benefits

Both LIC plans and SSA enjoy tax benefits under Section 80C of Income Tax.  The only difference within the two is that SSA enjoys EEE Tax Benefits, whereas, LIC plans do not.  EEE tax benefits means the maturity amount, the contributions and the interest earned on the account would all be tax exempted.

In terms of Specific Requirements

This is one major aspect where the basic difference lies within Sukanya Samriddhi Account and Life Insurance from LIC.  Both the investment schemes have different objective altogether.

On one hand, LIC offers life insurance cover in which an assured amount is given to the insured account holder, who has been depositing a fixed sum at regular intervals.  Even without the death of the account holder, there is a promised sum that the insured gets after the terms gets over.  Anyone is eligible for taking up a life insurance, subject to medical conditions.

On the other hand, Sukanya Samriddhi Account is specifically for a girl child and the scheme has been launched with a purpose to secure the future of a girl child.  Under this scheme, the parents of a girl child below the age of 10 years can get an account under the child’s name and keep depositing whatever they save on a daily, monthly or yearly basis.

The proceeds in SSA goes directly to the girl child at the time of her higher education or marriage.  Since, the scheme was launched under ‘Beti Bachao, Beti Padhao’ campaign, it enjoys a complete EEE tax exemption benefits.  All this is provided to ensure that parents or legal guardians save more and more for their girl child, thereby ensuring a better future for all females in future.

In terms of Nominations

Both the investment schemes enjoy nominations, in which the account holder can nominate at least one person for the proceeds, in the event of death of the account holder.

Both the SSA and LIC schemes are good at their own ends.  They both have different purposes and one can’t supersede the other in any aspect.  If your daughter has a life insurance, that is good.  However, this should not stop from getting her a Sukanya Samriddhi Account.

Life insurance would cover her life, whereas, SSA would cover her expenses incurred when she grows older for marriage and higher education.

Last but not the least, if you are looking for investment scheme for anyone other than a girl child below the age of 10 years, SSA would not be applicable.  However, if you can spare a definite chunk of money every quarter, half yearly or yearly, you should opt for at least a good insured amount of life insurance.