Child Plans Myths Busted

One of the most wonderful memories in a couple's life is being a parent. It is said that the birth of an infant gives birth to a mother and a father. This parenthood brings a transition in their lifetime, with new duties to be met as parents. First priority of a parent is to make sure that their child has financial support from the parents to achieve his dreams and aspirations. Life insurance child plans are a great way to ensure that your child gets to achieve his/her goals and has financial resources even in your absence. 

Most parents are skeptical about investing their money in a child plan but a child insurance policy can be a perfect mechanism for providing some financial coverage for the child. Here are some common child insurance myths that have been demystified.

Also Read:- 5 Reasons To Purchase A Child Plan

Common Child Insurance Myths Busted

The following points aim to counter the misconceptions and provide a fact check for stronger and responsible decision-making:

MYTH 1: Child Insurance Covers the Child Only

The most prevalent misconception that surrounds child policies is that life insured is a child. Most child insurance schemes identify the income-earning parent as the life-insured parent and the child as the beneficiary.The advantage of such a policy is that the desires of the child are fulfilled, even though the adult is no longer around.

MYTH 2: Only Lump Sum Death Benefit is Paid Under the Policy

It is a preconceived assumption that on the untimely death of the parent, the lump sum will be paid as an insurance death benefit and the policy will be terminated thereafter.

The very nature and appeal of a child's policy is that it comes with a Rider Fee Waiver. Upon the early death of the spouse, the potential premiums are waived and the program continues. This does not affect the incentives to be offered under the scheme at maturity. There are extra incentives along with the lump sum paid directly after the insured's death.

This is a smart way to ensure that, following the death of the policyholder, the family will not have to shoulder the financial pressure.

MYTH 3:Child Plans Do Not Offer Liquidity

Child policies are flexible. These programs are available as traditional/money-back policies and ULIPs. In traditional/money back plans, annual bonuses shall be paid at set times in accordance with the milestones proposed in this policy.Whereas the ULIP allows for the flexibility to cancel after 5 years for any expenses incurred for the education of the infant or for any other child dependent expenses.

MYTH 4: Child Plans Lack Complete Transparency

Under ULIPs, which are market-linked child schemes, all costs are explicitly stated to provide the policyholder with accountability. These charges can refer to the management, administration, and mortality of funds.The policy statement sets out the breakdown of the different charges and the value of the premium invested. The policy holder therefore gets a monthly statement of your assets, which can be tracked on a regular basis.

MYTH 5: Benefits of Child Plan Can Only Be Availed For Higher Studies

The child insurance coverage does not have any limits on the use of the incentives of the plan. When the benefits of the policy are compensated,It is entirely up to you to decide if you intend to make use of the funds at the end of the day. If your child wishes not to do further study or you would like to use the funds to achieve any other promise, you will do so regardless of the initial goal it was meant for.

You May Also Like to Read:- 5 Best Child Life Insurance Plans To Buy In 2021

Things You Must Know About Child Insurance Plans Published On Apr 06, 2021 12:00

Take Away

The detail shared above is intended to clarify the misconceptions about child insurance. So consider the facts and make responsible choices about the future of your kids. Take into account the dual benefits of a child policy.