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Pros And Cons Of Purchasing A Child Plan

Published On Dec 22, 2021 10:00 AM By InsuranceDekho

A child's life insurance plan, also known as a Child Plan, is a mix of insurance and investment that can assist your children to meet their financial obligations. It not only pays out enormous quantities of money, but it also allows policyholders to withdraw funds from their savings account at any time. A Child plan is a great way to ensure that your child reaches all of life's milestones. A Child insurance plan allows you to invest in your child's future while also assuring that the promised money is paid out even if one of the parents dies before the child reaches adulthood. Purchasing separate insurance for their child, on the other hand, is not as cost-effective as investing their money elsewhere for most people.

Pros of Buying A Child Life Insurance Policy

You will prioritise securing your child's future as a parent. Here are some advantages to think about before buying Child insurance for your child:

  • The most important advantage of buying a Child insurance policy is that it covers your child in the event of a tragic event. If you are unable to care for your children, they will be taken care of by a good insurance policy that meets their financial demands.
  • Child insurance policies are meant to secure a child's financial well-being throughout his or her life. Many child insurance policies have a maturity period that is determined by the Child's age, such as when the child becomes 18, 21, or 24.
  • A Child life insurance policy works as a savings account for your child as well as provides coverage. The lump-sum payment obtained when your Child reaches maturity will be used to assist your child in achieving different goals, such as education, marriage, and so on.
  • Guaranteed bonuses, surrender benefits, and other rewards should be considered as well. Income-saving, premium waiver, personal accident compensation, and critical condition riders can be added to your child's basic insurance coverage.

Cons of Purchasing A Child Insurance Plan

Some people believe that child policy are too expensive when compared to conventional term insurance. The following are some of the downsides of a Child life insurance plan:

  • Both in terms of life insurance and investment options, these policies perform poorly. When you get plain-term insurance, you may obtain a lot of coverage for a cheap price.
  • The term-insurance-plus-mutual-fund combination beats the children's plans in terms of both costs and return. As a result, it's easier to avoid these plans and instead choose a term plan or a mutual fund.
  • You may get the same effects by combining term insurance and mutual funds, even though they give tax benefits. The safest investment choice is equity mutual funds. Because of the low expenses, you will put as much money as possible into these accounts. If a fund underperforms, you may typically sell it and move your money to another fund without paying any taxes.


Even if you are not present, child life insurance plans ensure that your Child's future financial needs are addressed. Many People argue that children's life insurance plans are appropriate financial tools for larger savings and investment portfolios. Children's insurance, according to critics, is a waste of money for most families because it only pays for missed wages.

Also read - How Do Child Insurance Plans Work?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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