Being a secure person in this chaotic world may feel so overwhelming and devastating. But with a proper implication of safety net around yourself and your loved ones will help you fight this critical situation with ease.
To secure your child’s future and in order to complete their future goals without collapsing the cash flow becomes mandatory. Here what we call a child insurance plan comes into action. On the contrary, if you have dependents like a spouse, children, or old-age parents, then term life insurance can be the ultimate stop for you. Have this article read for a better understanding of how a child plan or a term plan can help you in the long run.
Aspects of Child Insurance Plans and Term Insurance Plans
A child insurance plan and a term insurance plan come with their own set of commonalities and differences. But it’s interesting to know the aspects of these two plans when compared to each other. Let’s dive into more information about these plans:-
| Child Insurance Plan | Term Insurance Plan |
|---|---|
| A parent to the child buys a policy where the child upholds as a beneficiary under the plan and the premiums are on the higher side | An adult who is 18+ of the age can buy this kind of plan to secure his/her future worries and the premiums under these plans are usually low when compared |
| It allows the child to upstood in unforeseen circumstances where either of his/her parents passes away | These plans can be entertained for a specified time period, say 10/20/30 years. |
| It serves as a corpus of the future for the child whereas he/she may avail of double benefits of life insurance and as an investment in an advanced | Term plan that has a return of premium option, and provides maturity benefits as well, if the insured person outlives the policy tenure |
| These plans also allow a waiver of premium benefits which can sometimes act like a rider | It helps the insured to avoid any unforeseen circumstances if he/she does not survive the term of the policy |
| These plans have a pre-decided payout where the nominee that’s the child will receive the amount when needed | If the policyholder survives the policy term, he/she will not get any amount, until and unless he has a survival rider intact with the plan |
| Once the policy has matured, the beneficiary/child gets paid with the maturity benefits in order to fulfill his/her future goals like getting a higher education or his/her wedding | The policyholder does not get any maturity benefits but being a pure life protection plan it can provide the death benefit to the insured. |
What is the Difference between Child insurance and Term insurance?
This table of differences between a child insurance plan and a term insurance plan elucidates the dissimilarities that are subject to apply on most of the respective plans:
| Child Insurance Plan | Term Insurance Plan |
| Offers life coverage and maturity benefits | Doesn’t provide maturity benefits but only life coverage |
| The beneficiary of the policy is a child | The beneficiary name can be associated with any member of the family |
| Since it has a maturity benefits clause, the premiums are usually higher | Since no maturity benefits are offered, it has low premium rates |
| The objective of the plan includes the financial security of the child | Objectified as securing the future of family members in the absence of an insured |
| Under child insurance plans, one can avail of the tax benefits | Under a term insurance plan, and taxes over critical, illness riders can be exempted |
| In a case where the policyholder passes away, he/she will receive the death benefit | In case the policyholder has opted a pure-term plan, he will not be able to receive any maturity benefit but he will definitely get the death benefits. |
| In a case where the policyholder outlives the policy tenure, he/she will get the maturity benefits of the plan | In case the policyholder has opted for a Return of Premium Term Plan, he/she will receive maturity benefits |
What are the best child plans in India?
There are multiple child insurance plans in India, a few of the best child plans are mentioned below:-
- Aviva Young Scholar Plan
- PNB MetLife College Plan
- Bajaj Allianz Young Assure
- AEGON Life Rising Star Insurance Plan
- Max Life Shiksha Plus Super Plan
Conclusion
There might be major differences or suitability between a child insurance plan and a term insurance plan. But the connection between these two plans justifies both as a component of security for the policyholder’s child and loved ones.
A child plan usually helps the insured’s child to protect them from financial collapses if the policyholder dies. The idea behind a term plan is to secure the future worries of the insured’s family whether he/she survives around them or not. So it’s better to repurpose the objective of why are you buying a plan, the plan I should buy will already be resolved after this.