Child Insurance Plan Vs. Mutual Fund- Which is a Better Investment?

What is a Child Insurance Plan?

A child insurance plan is a blend of insurance plus investment. It offers ultimate financial security for the policyholder’s child.

Considering the uncertainties of life, this plan offers death benefits to the child by covering the insured parent’s life. If the insured outlives the policy tenure, the maturity benefit is provided in a lump sum payment.

This way policyholder can use the money for your children’s higher education or their other important life events. Not only this, a child plan comes with a flexible pay-out option to financially aid the child of the policyholder at important milestones of his/her life.

What is Mutual Fund?

Let's understand the definition by its name. When a large number of investors pool in money with the same investment objective they create a mutual fund. An Asset Management Company manages the accumulated money and invests it in equities, stocks, bonds, and other market securities.

As a mutual fund investor, you hold a specific unit of one type of investment with other investors who hold their units in the same. Each unit is traded based on Net Asset Value (NAV). The income generated from mutual funds is then distributed on an individual proportionate basis. 

One thing to note here, the NAV keeps changing due to the volatile market conditions which further affect the overall gains/income. This is why it is also considered a high-risk investment scheme.

Child Plan Vs. Mutual Fund: A Comparison

When it comes to saving a portion to secure your child's future, it is very important to invest in a way that the corpus built over years would benefit the child. It can be confusing to decide whether to opt for a child savings plan or mutual fund.

With the help of below mention comparison, it can get easier to make an informed decision:

Investment

Secure

Secure your child’s future with or without you

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₹10,000/Month

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₹1 Crore^*

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Wrapping it Up

Child insurance plans and mutual funds both are good investment options.  However, you wouldn't want to take high risks when it comes to building a tidy corpus for your child's future. The mutual fund investment is a great investment tool for someone who is disciplined with market fluctuations and can take high risks. While on the other hand, a child plan offers a steady corpus with a life cover that safeguards one’s child's future in case of his/her untimely demise.