Child Life Insurance Plan Vs. Endowment Plan

Benefits of Endowment Plans
Benefits Of Child Plans
Conclusion

An endowment plan is a life insurance policy. A life insurance policy where the life assured’s life is covered and where the life assured is supported to save money for various events in life over a period of time is called an endowment plan.

Child plans are great and efficient to save and grow money for the unforeseen expenses in the future of your child. More frequently than expected, parents think they have planned for everything financially but in some cases, unfortunate events might occur where you or your child might need financial support. Investing in child plans is the solution to all the problems.

Benefits of Endowment Plans

Endowment plans offer the following benefits -

Life Insurance Benefit

Your loved ones will always be looked after. Life insurance provides a lump-sum payment, guaranteeing that your family members can continue to live the lives you so carefully planned for them even if you pass away. This is a set sum that is paid to your legal heir or nominee.

Maturity Benefit

The maturity benefit is guaranteed as long as you pay your premiums on time and keep your endowment insurance active. This is a fixed maturity benefit amount that will help you achieve your financial objectives. The policy term, policy premium, premium payment term, age, and agender all influence the maturity benefit. In some policies, guaranteed additions may be available upon maturity.

Tax Benefit

Endowment insurance schemes also provide tax advantages. Section 80C of the Income Tax Act allows you to lower your taxable income by paying premiums. There are other tax advantages available when endowment policies mature. This allows you to save money on taxes during the policy’s commencement, accumulation, and maturity stages.

Must read: Why Consider Purchasing Child Life Insurance Plan?

Loan Benefit

You can use endowment policies to secure a loan You can get a policy loan once your policy has surrender value. The interest rates on these loans are low compared to other instruments. Some ICICI Prudential conventional plans, for example, allow you to borrow up to 80% of the surrender value. The loan advantages assist you in arranging funds in an emergency and when all other avenues of the collection have been exhausted.

Benefits Of Child Plans

Investing in child plans means preparing a strong foundation for your child’s financial future. This is how -

Wide Range of Benefits

Child plans help the parent or the guardian build a corpus for your child’s education. Some child life insurance plans allow partial withdrawals. This helps you to address any unforeseen financial emergency. The insurer pays the future premium if the event ever occurs that the parent or the guardian happens to accidentally die to keep the policy alive.

Availability of Different Types of Child Plans

There are unit-linked (ULIP) and endowment child plans available. ULIPs invest in markets while child endowment plans usually provide you with a fixed guaranteed return. Considering your risk appetite and other factors of your income, you can pick a suitable one.

Choice of Pay-out

They usually come with two types of pay-out options namely, lump sum and regular payout. Lump-sum payouts give you a high return at once at the end of the policy term to invest in major long-term goals of your child, For instance, higher education, and marriage expenses can cost you a fortune. This helps you cover these expenses comfortably. Regular payouts make sure that the short-term needs of your child such as admission fees are taken care of.

Conclusion

Child plans and endowment plans come with great and different benefits. Child plans are tailored specifically to meet the necessities of a child but if endowment plans suit you better, you can invest in them to help your child financially.