Child Insurance vs Term Insurance: Check Out The Detailed Comparison
Updated On Nov 09, 2022
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Every individual has a responsibility towards his/her family and as a parent to his/her kids to make sure that their future financial status is secure and stable in their absence. As an individual who is soon going to start a family, you have an obligation to make sure that your family’s future is protected financially in your absence. As a parent, you have a parental obligation to ensure that your child is provided with the best in life and education when you are not with them. Therefore, it is important to buy insurance plans according to your needs which are specially designed to suit the needs of the particular goal. As an individual securing the future of your family, term insurance plans are the best and as a parent, creating a future for your child, child insurance plans are the best.Read on to know about the difference between child insurance plan and term insurance.
What Is a Term Insurance Plan?
Term plans are the purest and simplest forms of insurance. With the help of term insurance plans, you can provide protection for your family members in your absence. If anything were to occur to you, the insurance provider would provide the guaranteed payment to the plan beneficiary. Personal life insurance coverage only serves to protect you, and in some cases, it may extend into retirement. Term insurance policies can be tailored to your needs. In a term plan, you can obtain a huge corpus at a significantly low premium. The benefit is also the amount that is paid to the beneficiary or the nominee of the policyholder in case of the policyholder’s demise when the policy term is still in effect.
What Is a Child Insurance Plan?
A child insurance plan serves as a life insurance policy and investment that, over time, contributes to the future well-being of your kid. There are a variety of child plans available in the market. Parents are the main policyholders and the kids are the beneficiaries of child insurance. Based on the earnings generated, the investment portion of the policy helps pay for your child's college education or marriage. While the life insurance portion protects your child's financial future in the case of your untimely demise.
Difference Between Term Insurance and Child Insurance Plans
The differences between both the plans are as follows -
Child insurance plans offer insurance and investment benefits. On the other hand, term insurance is a product of life insurance.
The rate of premium for a child insurance plan would depend on the coverage chosen and the benefits it entails. In addition, the insurance company keeps on investing after your accidental demise, therefore creating a huge corpus in the case of a child insurance plan. In the term plans, high life cover is charged at an affordable and cheap premium rate. You can use a term insurance calculator to evaluate the premium rate of the benefits chosen.
Child insurance plans provide money to the child only at a specific time period or in a specific stage of life. In contrast, in a term insurance plan, death benefits are paid to the family members.
In child insurance, a lump sum is paid to the child after your death, however, in term insurance plans this lump sum is provided to both the beneficiaries as well as the children.
Both of the insurance plans are eligible for tax benefits according to section 80 C of ITA.
According to 80 D, you can apply for a tax deduction on the critical illness cover in your term plan.
You should now be able to understand the distinction between term insurance plans and child insurance plans based on the differences covered above. Investing in a kid plan is a smart move if your only goal is to help ensure your child's financial stability. However, term insurance is the best option if you want to protect your entire family's finances while you're gone.
Also Read: How Do I Invest Money For My Child’s Future?