Child Life Insurance Plan Or Fixed Deposits? Which Is Better?
Published On Sep 13, 2021
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With the birth of a child, extra resources are required to meet the infant's fundamental demands as well as any Given the ever-increasing expense of school, not many of us may be able to readily afford decent education or financial assistance for our children. You may utilize this Child insurance plan to establish a strong corpus to support your child's education, assure a brighter future for them, or even to cover their wedding expenditures. Although, because of the product's simplicity, you may be persuaded to start a fixed deposit. That is, you know the interest rate and may select the period of your choice. You may choose a recurring deposit for additional convenience and frequent investment, which likewise provides a set rate of interest but allows you to invest lesser sums every month.
Child Plan vs Fixed Deposit – Where Should One Invest?
Following are the difference between child plan and fixed deposit:
1. Insurance and Investing Provide A Two-For-One Advantage.
A kid plan combines insurance and investing advantages into one package. It allows you to save money while also protecting you from unanticipated events.
2. Fund Value and Lump Sum
A kid plan offers your child a lump payment at maturity as well as financial stability in the case of a parent's death during the policy term. A fixed deposit, on the other hand, rewards the proposer with a lump sum when it matures.
3. Allowance For Partial Withdrawals
A life insurance policy for your kid permits you to make partial withdrawals from the policy before it matures. This is a significant advantage since you may withdraw funds to cover any unforeseen demands or to fulfill other financial commitments. A fixed deposit, on the other hand, does not offer this option.
4. Waiver Of Premiums
Child plans are intended to offer financial assistance. If a parent dies during the period of the kid’s plan, the insurer will provide a premium waiver. As a result, the child will get the promised lump payment without having to pay the remaining premium.
5. A Child Plan Provides Liquidity
A child plan allows withdrawals after a certain time, making it a liquid instrument—an important characteristic that a fixed deposit lacks. You can opt to surrender your insurance after four years and still get the entire market value of your investment, net of costs, up to that point. On the other hand, if you relinquish a traditional fixed deposit, you will have to accept a reduction in your investment.
Simple monthly savings will not suffice to pay the growing expense of higher education. School costs should be the final barrier to your child's success in a fast-paced environment. Child insurance policies provide you the option to spend based on your child's educational demands, current financial position, and other monetary goals. A child plan is a safe and effective tool for planning your child's future. There are several policy choices available, with terms ranging from 10 to 25 years. Through online aggregator websites, you can quickly analyze many available products and select the most appropriate one according to your desired fund value and coverage needs.
You may also like to read - Salient Features of Child Insurance Plan