Child plans Myths Vs Reality

Child Insurance Plans are plans people invest in to ensure the financial security of their children's future. An existing premium waiver provision is included with this Child's insurance. Because of this premium waiver advantage, the remaining premium payments due after the patient passes away while the insurance was in effect will no longer be unsettled.

Although you should engage in one of these child insurance policies, you can also hear pretty viral myths. This blog focuses on the truth about child plans against some widespread myths about them.

Types of child insurance plans in India:

A child insurance policy is a fantastic instrument for ensuring the child's financial security. It brings in the corpus needed for each milestone the child will reach. A child insurance plan is ideal, especially for educational demands.

Child insurance plans can either be traditional or unit-linked. Some traditional child insurance plans are either endowment plans or money-back in nature.

General myth statements of child insurance plans:

Investing in a child insurance plan is wise to help you meet your child's future financial needs, as you will be guaranteed¹ reimbursements at your child's significant life milestones. However, let's look at some of the misconceptions surrounding child insurance policies before you make your choice of plan.

1. Only the child is insured:

The child plan is the subject of one of the most pervasive misconceptions. Child insurance policies come in two general categories: -Where the parent is insured such that if the parent dies within the policy tenure, the future premiums are waived off, and the policy continues to pay the maturity benefit as per the policy schedule. This variant is more popular as it is for the benefit of the child.

-Where the child is insured, and the parent or the guardian is the policyholder. So, when choosing a child insurance plan, understand the requirement and take appropriate coverage which suits your requirement.

2. The child's insurance policy expires automatically when the parent dies:

The child insurance policy does not expire if a parent has passed away. Instead, most child insurance plans provide a premium waiver benefit that gives the child extra financial security.

After a parent passes away, the insurance company pays the premiums, and the plan continues to pay for the survival or maturity benefit as per the policy schedule. Therefore, it is mistaken for anyone to believe that a child's insurance policy expires when a child's parents pass away.

3. The child plans can cover only the expense of the child's education:

The insurance policies state no limitations on how to use the benefits, which implies that the child is free to use the Plan benefit.

4. Difficult to understand the policy's terms and conditions:

The idea that all of the terms and conditions of the child insurance plan are very complicated to understand is one of the other most pervasive myths.

This is not true, as all the terms and conditions of the plan are clearly listed, including the tax benefits². A child insurance plan works similarly to any other life insurance plan and is definitely not difficult.

5. Payout is received only at the end of the policy tenure:

You can take advantage of the payout before the child's education plan has reached maturity. Some plans have survival benefits, while other plans, such as child ULIPs, permit partial fund withdrawals after the five-year lock-in period has passed.

Additionally, you can time the exits to correspond with your child's important life events by scheduling them at regular intervals.

6. Payout is received only once the child turns eighteen:

If the policy schedule defines payout at predefined timelines, i.e. after every 5 years or at a specific time, then the payout would be provided accordingly. This is irrespective of the age of the child at the time of the payout.

Final thoughts:

To ensure your child's future for a college education or marriage, purchase a child insurance plan. It is the best option to secure your Child's financial security if you cannot care for them yourself.

It's a good idea to start saving money for your child's education. Your best partners in this regard are time and consistency. The important thing is to start saving as soon as possible to ensure that your returns will be better in the long run, regardless of how much you start with.

https://www.financialexpress.com/money/insurance/5-most-common-myths-about-child-insurance-busted/1648715⁴