A Guide on How Child Insurance and Term Life Insurance are Different

In the realm of financial planning and security, insurance policies serve as the bedrock for safeguarding your family’s future. Among the plethora of insurance options available, term life insurance and child insurance stand out for their distinctive purposes and benefits. 

As an insurance aggregator in India, Digibima is dedicated to demystifying these products, making it easier for you to choose the right policy for your family’s needs.

Understanding Term Life Insurance

Term life insurance is akin to a financial safety net that you lay out for your family, ensuring they remain financially secure in your absence. This type of insurance is designed to offer protection for a specified term or period. If the policyholder passes away within this term, the beneficiaries receive a death benefit, which can be used to cover living expenses, debts, and future needs. 

The beauty of term life insurance lies in its simplicity and affordability, offering substantial coverage for lower premiums. However, it’s important to note that there is no maturity benefit if the policyholder outlives the policy term.

Diving into Child Insurance

Child insurance, on the other hand, is like planting a seed for your child’s financial future, ensuring it grows into a strong tree, regardless of storms that may come. It combines investment and insurance to offer a lump sum amount to the child at the maturity of the policy or in the unfortunate event of the policyholder’s death. 

The dual benefit of financial protection and savings for future expenses, such as education and marriage, makes child insurance a preferred choice for parents aiming to secure their child’s future.

Key Differences Between Term Life Insurance and Child Insurance

  • Purpose and Benefit: Term life insurance primarily provides financial security to the beneficiaries in case of the policyholder’s demise. Child insurance, however, serves a dual purpose – offering a safety net in case of the parent’s untimely death, and acting as a savings instrument for the child’s future.
  • Coverage Term: Term insurance is flexible, allowing policyholders to choose a term that suits their needs, typically ranging from 10 to 40 years. Child insurance policies, conversely, are often structured around the child’s key life events, maturing when the child reaches a certain age.
  • Premium Payment and Maturity Benefits: Term life insurance premiums are lower compared to child insurance, reflecting the absence of a maturity benefit. Child insurance premiums are higher due to the savings component and the guaranteed sum assured upon policy maturity.
  • Investment Component: Term life insurance is a pure protection plan without any investment component. Child insurance plans, however, are part investment, which means a portion of the premiums goes into investments to build a corpus over time.

Choosing the Best Policies: A Digibima Perspective

When it comes to selecting the best term life or child insurance policy, it’s essential to assess your family’s specific needs, your financial goals, and the features offered by different policies. Here are some recommendations from Digibima:

  • For Term Life Insurance: Look for policies with a high sum assured, flexible premium payment options, and the possibility of adding riders for additional protection. A policy that allows for critical illness coverage can be particularly beneficial.
  • For Child Insurance: Choose a policy that offers flexibility in premium payments, periodic payouts to align with your child’s educational milestones, and a waiver of premium benefits, ensuring that the policy is in effect even after the policyholder’s demise.

Examples and Metaphors

Imagine term life insurance as a sturdy umbrella that offers you protection during a downpour – it’s there when you need it but doesn’t offer benefits when the skies are clear. 

Child insurance, in contrast, can be likened to a savings jar that not only protects your savings from unforeseen events but also steadily grows over time, ready to be used when your child is ready to embark on their journey into adulthood.


In conclusion, both term life insurance and child insurance serve pivotal roles in a comprehensive financial plan, safeguarding your family’s future in different ways. With Digibima’s insights and guidance, navigating the intricacies of these insurance products becomes a journey of informed decisions, ensuring that you lay down the most robust financial foundation for your loved ones.

FAQ Section

Q1. Can I invest in both term life insurance and child insurance?

Yes, investing in both can provide comprehensive coverage for your family’s financial needs, offering both security and savings for your child’s future.

Q2. Is the premium for child insurance tax-deductible?

Yes, premiums paid for child insurance are eligible for tax deductions under Section 80C of the Income Tax Act, similar to term life insurance.

Q3. Can I choose more than one beneficiary for my term life insurance policy?

Yes, you can nominate multiple beneficiaries for your term life insurance policy, specifying the proportion of the sum assured each beneficiary will receive.

Q4. How do I decide the sum assured for my child insurance policy?

Consider future inflation, the rising cost of education, and your financial goals for your child’s future when deciding the sum assured. It’s crucial to choose an amount that will adequately cover future needs.

Q5. What happens if I fail to pay the premium for my child insurance policy?

Most policies offer a grace period for payment of premiums. If premiums remain unpaid beyond this period, the policy may lapse, potentially impacting the benefits.