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Child Plans or Mutual Funds, Which is Better?

Published On Mar 24, 2021, Updated On Apr 23, 2021

As a parent your first priority is to provide your child with the best facilities that will enable your child to have a bright future and fulfil his/her aspirations. It is very important to understand which investment option is better for a financially secured future of your  child. Child life insurance plans and Mutual funds are a good choice for investment but before purchasing either one of them you must know about them and must which one of them is a better investment option for you. Read below to learn more about child plans and mutual funds.

Also Read:- Why You Should Consider Investing In Child Plans?

What Are Child Plans?

A child insurance plan is a blend of life insurance and investment features that promises to offer a financially secured future for your child. As it is a life insurance plan, a lump sum amount is paid under this type of plan at the end of the policy term and the investment benefit can be availed either as a lump-sum amount or by way of regular instalments. The investment benefit amount can be accumulated to overcome your child’s higher education expenses, marriage expenses or even help him kick-start his entrepreneurial aims.

What Are Mutual Funds?

Mutual funds are an open-ended investment tool that clubs the money from various investors to purchase securities. It is professionally managed. Mutual funds usually pool the money from various investors and use that money to purchase other securities, such as stocks and bonds.

How Are Child Plans Different From Mutual Funds?

Child plans are a type of life insurance plans that provide cover for parents. Under a child life insurance plan, if a life assured passes away during the policy term the sum assured is provided to the nominee in case the child is under 18, the sum assured can be used to fulfil life assured’s child’s future financial requirements..On the other hand, mutual funds are an investment tool and do not offer any life insurance cover by default. 

Child plans may not offer any flexibility in the investment options but as for mutual funds the investor has the option to choose from a broad spectrum of mutual fund schemes to achieve their financial goals.

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