Child Insurance v/s Child Education Plan: Which is Better?

Every parent wants to give the best in this world to their child. Nothing is more important than securing a child’s future for any parent. You need to plan well in advance to watch your child’s dream come to reality. Financial planning for a child’s future is paramount. Child insurance plans and child education plans are the two main investment options available for you to secure your child’s financial future. Though both the financial products – child insurance plan and child education plan may sound similar and serve the same purpose, both are totally different from one another in many ways. Let’s understand the difference between a child insurance plan and a child education plan to help you make the right investment choice.

Difference Between Child Insurance Plan and Child Education Plan

Let’s understand the difference between a child insurance plan and a child education plan on the basis of certain elements. The following are the differences between a child insurance plan and a child education plan:

Time horizon

The time horizon or the maturity period of both plans is different. Child insurance plans are designed for long-term goals. When the child is born or when a child starts going to school, parents can invest in a child insurance plan for the purpose of meeting their higher education cost or securing their financial future during eventualities. The investment period would be more than 10 years. On the other hand, a child education plan is a short-term investment option to meet the ongoing educational needs of your child.

Basically, the plan makes annual or quarterly payouts of the money invested by you to meet your educational needs in the near future. For example, for your child’s education cost of primary school, you need to start investing when your child is in kindergarten. For college education, you need to invest when your child is in secondary school. Child education plans come with a short-term maturity period.

Scope of cover

The main benefit or the scope of cover offered by a child insurance plan and a child education plan is different. The child insurance plan provides wider coverage as the maturity period is longer, and the benefit paid out on the death of the parent or on the date of maturity are also higher. A large lump sum benefit offered by the plan ensures the entire education journey of the child is not compromised in any situation. In case of eventualities, the death benefit paid to the beneficiary child can be utilised for securing their financial future and can be utilised for all future needs, including education.

A child insurance plan ensures every goal of your child is achieved even when you are not around. Death of a parent, income loss due to a disability, etc., the uncertainties of life that can shatter the dreams of any child. While nothing can ever replace the support of parents, financial support can provide the strength to achieve their dreams. In all these eventualities, having a child insurance plan can be of great support to the child.

On the other hand, a child education plan comes with a limited scope of coverage. There are no death benefits or long-term benefits offered in this plan. It only provides educational benefits to your child. The benefits offered by the plan are very precise in nature which you can utilise only to meet the education expenses of your child in the near future. You can invest in a child's education plan to get financial support at various stages of your child’s school life.

Benefits

Child insurance plan comes with wider benefits that offer financial protection and stability during eventualities. Along with the lump sum death benefits and maturity benefits to the beneficiary child, there are other additional riders offered along with the basic coverage to offer your child added protection. Income benefit rider, waiver of premium rider, etc. some of the useful riders that can ensure financial stability for your child during eventualities.

The lump sum benefits paid under the child insurance plan can be utilised to meet the higher education cost, repay a student loan, or for a child’s wedding, etc. On the other hand, the benefits offered by the child’s education plans are quite clear and precise. You can only utilise the benefit for a child’s education purposes at different stages of their educational life. Also, the plan comes with a shorter maturity, limited benefits, and no added advantages to the beneficiary child.

Conclusion

To sum up, both child insurance plans and child education plans are designed to meet the educational needs of your child, and both pay definite benefits to your child. However, there is a lot of difference between a child insurance plan and a child education plan in terms of the maturity period, the scope of cover, and the benefits offered. It is always wise to make decisions based on your individual requirement and needs. Ensure to make the suitable and right choice to secure your child’s future.