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Child Plans Vs Regular Term Plans: What Should You Go for?

Types Of Term Insurance Plans - Term Insurance Blog

Most parents worry about providing the best to their little ones and the financial aspect of fulfilling their dreams. So, have you been stuck choosing between child insurance and term plans as well? Though both these policies offer different features, they provide a life cover that helps secure financial support in your absence. Let’s compare both child plans and regular term insurance plans to understand which one you should purchase.

 

What Is Child Insurance Plans?

A child insurance plan is a type of insurance policy that protects the future of your little one by providing financial security. As a parent, you might want to offer the best to your child when it comes to fulfilling their dreams. The child life insurance plan provides a pure risk cover and a lump sum maturity payout on the expiry of the policy. In case you would prefer getting regular payouts during certain milestones in your child’s life, then you can opt for money-back policies. There are numerous types of child life insurance that ensure your precious one’s dreams and hopes come true. So, you can easily customise the life insurance for children depending on the future requirements of your little one.

 

What Are Term Insurance Plans?

A term insurance policy is a pure life cover plan that offers coverage against the risk of death. In case something happens to the policyholder, the insurance company pays out a lump sum death benefit to the beneficiary. Thus, the financial health of your loved ones won’t go for a toss in your absence. When it comes to taking care of the family expenses there’s much more involved than just household cost. With term insurance, you can secure a high sum assured cover that shall ensure your dependents are more than self-sufficient. As term policies are risk covers, the premium rates are lower than most life insurance plans. Estimate how much you need to pay for insurance with a term insurance plan calculator now!

 

Difference between Child Life Insurance & Term Life Insurance

With the following comparative view, you can understand the key differences between the two types of insurance plans:

 

Factors Child Life Insurance Term Life Insurance
Type of Policy A child life insurance plan offers a life cover along with a savings component Term life insurance is a pure risk cover
Premium Rate The premium quote for a child life insurance depends on the type of policy chosen and the selected benefits. However, the cost of such plans is higher when compared to term plans. Term insurance policies are the most affordable insurance plans in the market. As it only secures the risk of death, a high sum assured can be availed for a cost-effective premium amount.
Death Benefit In the event of the parent’s death, the death payout is given to the child. In case the policyholder passes away, the death benefit is paid out to the beneficiary of the plan i.e., the family.
Maturity Benefit Child life insurance has a regular maturity payout option or a lump sum option available on expiry. Term life insurance offers no maturity benefit as it’s a pure life cover policy.
Rider Benefits You can opt for various rider benefits with child life insurance to increase coverage. Term insurance plans enable you to maximise coverage by adding rider benefits to the policy.
Partial Withdrawal Option You can easily make partial withdrawals with child life insurance. However, there might be some terms and conditions that you may have to fulfil. You cannot make any partial withdrawals under term insurance plans, as they do not have a cash value.
Tax Perks The premiums paid towards child life insurance can be claimed under Section 80C of the Income Tax Act, 1961. A maximum cap of INR 1.5 Lakh is applicable.

The death or maturity benefit received can be claimed as tax-free under Section 10(10D) of the Income Tax Act, 1961.

The term insurance tax benefit enables you to claim the premiums paid under Section 80C of the Income Tax Act, 1961. A maximum cap of INR 1.5 Lakh is applicable.

The death or maturity benefit received can be claimed as tax-free under Section 10(10D) of the Income Tax Act, 1961.

 

With this, you must have learnt about child insurance and term insurance meanings. You can purchase a suitable life insurance policy based on your needs and which plan fulfils your long-term goals.