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Child Insurance Policy: Myth and Reality

Updated On Jul 15, 2021

Child Plans are a combination of Investment and Insurance Plans. These plans build up a lump sum amount over some time. The lump sum is paid out at the time of the Maturity of the Policy and can be utilized for the education and marriage of the child.

In this Article, we will discuss about Myths and Reality related to Child Insurance Policy 

Benefits of a Child Insurance Policy 

Certain benefits of Child Insurance Policy are as follows: 

  • Investment Corpus

The Sum Assured that builds up during the Policy Term will create a specific investment for the expenses that will arise related to education and marriage of your child. The Child Insurance Policies will make sure that there will be enough savings/ investment to meet all these expenses. 

  • Additional Riders

Though the Child Insurance Policies secure your child's future they do not protect the future of the child from other uncertainties that will affect their dreams in a drastic way. Riders can be purchased separately to make sure that whatever comes in the future your child will not face any difficulty. 

  • Premium Waivers

In case of the parents unfortunate and untimely demise, it becomes difficult to bear the daily life expenses and premium payment in such situations is an additional burden. The Premium Waiver benefit frees the family and the child from the stress of paying the premiums in the upcoming years after the parent's death. The Insurance Company offers the death benefit and takes the responsibility of paying the rest of the premiums. 

Confusion while Purchasing a Child Policy

There are so many companies in the market who are offering loads of different kinds of child insurance policies. Each one of them has their own benefits, pros and cons which makes it difficult for a parent to choose between which one is the best. It also creates misconceptions and dilemmas which affects the decisions a lot.

Common Myths Related to Child Insurance Policies

There are certain myths related to Child Insurance Policies. 

  • Child Insurance Policies cover the Child's Life 

A common misconception with Child Insurance Policies is that they cover the life of the child. But this is not the case as the Child Insurance Policy does not cover the life of the child but covers the life of the parent who is the sole earning member of the family or the one who supports the child' s future. The Policy creates a cover that makes sure that if the parent is around or is absent from the child's life, the dreams and future of the child will not be affected in any way. 

  • Child Insurance Policies only offer the Death Benefit in case of the demise of the Parent

The Death of the parent causes a disastrous effect on the life of the child. This not only affects the life of the child emotionally but as well as financially. The misconception is that if the parent dies then the insurer is only liable to pay the sum assured in the form of the Death Benefit, however the role of the Insurance Company does not end here. If there is a component called the Family income benefit then the insurer also pays a small amount to the family or the child as a secondary source of income till the educational expenses of the child are met. There is another component called the Premium Waiver Benefit, in which the premium payment expense is borne by the insurer after the death of the parent. 

  • Child Insurance does not have enough Liquidity

Another misconception related with the Child Insurance Policy is that your investment gets stuck for a long period of time and if any uncertainty arises then it becomes difficult for the child and the parent to meet those requirements. But let me tell you this is not true, many child insurance plans offer the facility of Partial Withdrawals after a certain period of time. These Partial Withdrawals can be used in such cases. 

  • Sum Assured is only for Higher Education of the Child

It is a myth that the sum assured offered in the Child Insurance Policies can only be utilized for the expenses related to the child's higher education. But this is not true, the Sum Assured received by the policyholder can be used in any form they intend to. The Amount is a return on investment and it depends on the insured how they spend the amount to create a better future for the child. 


Misconceptions are created when there is a lack of information among the people. People tend to create myths and stories related to insurance policies in the same way. These are mostly related to the benefits and features of the child policy, hence it is suggested that it is better to check the details and get a brief information related to the Child Insurance Policies before purchase. 

Also read 

Tax Benefits under Child Insurance Plans

Child Life Insurance Plans - Features,Benefits and Details

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.         

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