How Are Child Plans Different From Other Insurance Plans?
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Both child insurance and child education plans are ways to safeguard your child's future, but they differ in more than many ways. You can make a decision to secure your child’s future only after knowing the features of the two. Discover some of the characteristics that set them apart by reading on.
What Is Life Insurance?
A life insurance product basically ensures the financial security of your loved ones after your passing. Here, the policy can be useful to safeguard both your future and the future of your child.
Ideally, life insurance pays out a single sum of money to the policy's beneficiaries upon the death of the policyholder. The deceased's dependents may spend the money received as they see fit. However, term insurance is also the most cost-effective life insurance option
Unlike a child plan, you can buy the policy at any life stage and customise it as you expand your family. Because of this, Indian insurers let you increase the policy's coverage with rider benefits.
Your children's and other family members' financial futures are also secured by a life insurance policy.
What Is Child Insurance?
A child insurance plan serves as a life insurance policy and investment that, over time, contributes to the future well-being of your child. There are multiple child plans available in the market. Parents are the main policyholders and the children are the beneficiaries of child insurance.
Based on the earnings generated, the investment portion of the policy helps pay for your child's college education or marriage. While the life insurance portion protects your child's financial future in the event of your untimely demise.
What Distinguishes Child Plans Different From Other Insurance Plans?
Following are some of the key differences between child plans and other plans -
- Purpose
A life insurance plan, as the name implies, is largely for providing safety in case of your demise and seeks to support the family contingent to that event. In contrast, a child insurance policy will pay out the entire term amount or compensate he child when they attain at a certain age, allowing them to continue their education in the terrible case of the parent's passing.
- Premiums
The coverage and benefits chosen will determine the cost of a child plan's premiums.Additionally, the insurer keeps funding the coverage even after your passing. Therefore, the child plan rates tend to be higher compared to life insurance.
To calculate the rates for your chosen coverage and benefits under the life insurance, you can use the life insurance calculator.
- Payouts
Child plans give money to the kids at predetermined times or milestones. Except for the death benefit paid to your dependents, there are no payouts in case of child insurance.
- Partial Withdrawals
Child insurance permits partial withdrawals. Any financial obligation may be satisfied with the gained funds.
With life insurance, partial withdrawals are not permitted. However, if you have critical illness insurance, the insurer will pay you a flat sum when you are told you have a serious medical condition. The money earned might be used to pay for hospital stays and medical care.
Conclusion
While both child education and insurance plans offer the policyholder and the child clear advantages, there are differences in the duration, the premium paid, and the benefits covered. You can choose either option to safeguard your child's financial future after you are certain of the benefits you anticipate from your child plan.
