Child Education Plans Vs Child Insurance Plans - Know The Difference

Both child education plan and child insurance plans are for ensuring a secure future for your child, albeit with a difference. Education plans as the name suggests are specifically for the ongoing education of kids, right from the time they enter school. There are predetermined maturity stages, which allow funding at definite periods related to your child’s growing up years. Child insurance plans on the other hand provide maturity full-term amounts or compensates the child and allow them to continue their education in the event of the unfortunate death of a parent.

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Investing in your child's future:Nothing is more important than securing your child's future
Benefits of Investing In Child Plan
Waiver of Premium Benefit
Future Premiums are paid by the insurer upon death of policyholder
Flexible Payout Options
Your premiums help your child achieve their dreams through lump sum or regular payouts
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Tax Benefits^
You get tax benefits under Section 80(C) and no tax on returns under Section 10 (10D)
Investment Flexibility
It offers the flexibility to invest at regular intervals or as a one-time contribution
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Here are some points of difference between the two. 

Short-term V/s Long-term Plan

Most child education plans are short-term. With quarterly or annual payouts on the maturity of the sum invested. In such a kind of arrangement, you can project for the near future and get benefits at definite stages. For example, those who start investing in education plans when their child is in kindergarten can easily cover the primary education costs. Similarly, when you start investing when the child is in the secondary phase, get maturity financial benefits during the college life of your young one.

Child insurance plans on the other hand are long-term investments that parents can choose for their children. One can start directly from birth or even before that. The maturity tenure remains pre-determined and it covers the risks involved with the death of the parent.

Out and Out Education Benefits V/s Death Benefits

Child education plans as the name suggests are only for covering the education cost of your child. This is a clear and precise plan that funds the costs related to studies in the various stages of student life. It is wrong to expect anything else from such a policy.

The scope of child insurance plans is far wider. The main aim behind the insurance plans for your child is to provide him or her with an uninterrupted chance at education irrespective of the presence or absence of a parent. While nothing can substitute a well-wishing parent, it will be wrong to deny the power of strong financial backing. Even when the policyholder dies or loses their job because of permanent disability, the child can continue with education in the same vein without problems, thanks to the child's education plans.

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Invest ₹8K/Month YOU GET ₹80 Lakhs* For Your Child View Plans
Invest ₹5K/Month YOU GET ₹50 Lakhs* For Your Child View Plans
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Limited V/s Expansive Benefits

There is no doubt regarding the fact that child education plans have a limited scope when it comes to related benefits. It is specifically for the education of your child. Child insurance plans on the other hand provide financial help, which the policyholder can spend any way chosen, albeit for the good of their child. Use the maturity amounts on your child’s education, wedding, or for giving them a start in life. The limit of use depends upon the scope of the imagination of the policyholder.

Wrapping It Up! 

Child education and insurance plans both have definite benefits for the policyholder and the child involved. The difference lies in the tenure, the maturity period, as well as the benefits involved. Consider your situation or your expectations from a particular policy and start searching!

˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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