Children's day: How 20× term cover and 15–20 year guaranteed plans can secure your kid’s financial journey

Industry experts advise that the journey toward making children financially aware should begin much earlier than most parents assume. Many families tend to provide for their children generously — whether through toys, gadgets, or experiences — but often skip the crucial conversations about how money is earned. “Money doesn’t appear magically, and everything a child wants cannot be simply handed to them. Introducing the concept of earnings early helps them build resilience and appreciation for value,” explains Anup Seth, Chief Distribution Officer at Edelweiss Life Insurance.

For younger children, financial learning can begin through simple, everyday activities. Giving them a small allowance and helping them decide how to spend it teaches budgeting. Allowing them to compare prices during grocery shopping can introduce them to cost and choice. Even a weekly treat budget can be a practical, hands-on lesson in managing limited resources. These age-appropriate steps help children understand that money must be allocated thoughtfully.

Experts also encourage parents to introduce the concept of a “piggy bank” for non-essential purchases. Children can earn discretionary money by contributing to small chores at home, reinforcing the principle that wants require effort. Encouraging them to save a portion of their pocket money builds the habit of delayed gratification — one of the most important behavioural traits in long-term financial success.

As children grow, parents can gradually introduce concepts like bank accounts, interest rates, loans, and the difference between saving and investing. Experts say practical demonstrations are particularly effective in this phase. “Families can offer a 5–10% reward on savings maintained consistently for a year. It shows children how patience and consistency make money grow,” Seth says. Early conversations on good debt versus bad debt also prepare teenagers to navigate the borrowing decisions they’ll encounter later in life.

By early adolescence, experts recommend gradually involving children in household financial decisions. Parents can explain investment options, budgeting choices, and long-term financial goals, but they should also share real experiences. Discussing past financial mistakes or what one might have done differently provides valuable insight. “Showing transparency in your own financial journey builds trust and teaches children to approach money with maturity and caution,” Seth adds.

While building financial awareness in children is essential, experts stress that parents must also take key financial steps from the moment a child is born. Protection should always come first. A term insurance cover of 20 times the parent’s annual income is considered ideal to safeguard long-term goals such as education and living expenses if an unforeseen event occurs. Comprehensive family health insurance is equally important, as unexpected medical costs can derail well-laid plans.

To systematically build an education corpus, families can consider 15–20-year guaranteed savings plans, which combine protection with assured payouts at predetermined milestones. These plans often include a waiver-of-premium feature that ensures the policy continues even if the parent is no longer around. Guaranteed plans also allow families to lock in long-term interest rates while remaining shielded from market volatility.

Experts say guaranteed products should be complemented with equity-linked investments such as mutual funds or ULIPs. With an investment horizon of 18–20 years, even modest monthly contributions can grow substantially. Parents can begin with higher-risk assets when the child is young and gradually shift to safer instruments as key education milestones approach.

By combining protection, disciplined long-term savings, and early financial education, families can ensure their children enter adulthood not just with financial security, but with the capability to manage it wisely.