10 Myths about Child Insurance Plan

Your present to your child's future is a child insurance plan. It's your piggy bank, which you've carefully built up over the years to assist your child achieve his or her goals. The child's ambitions may include not just school and professional opportunities, but also intriguing hobbies and ideas that, if cultivated, have the potential to transform the world.  However, a Child insurance plan is frequently misinterpreted, and the true benefits are overlooked. It's critical to debunk these prevalent misconceptions so that all parents may benefit from these policies.

10 Myths about Child Insurance Plan

The following points debunk myths and provide a reality check for more informed decision-making.

Myth #1: It Only Provides Coverage for Children.

A Child insurance plan, like any other insurance plan, protects the income-earning individual. Even in the absence of an income-earning parent, the policy assures that a child's ambitions and aspirations are never dashed. You can also utilize the insurance to achieve other financial objectives, such as wealth growth and retirement planning. 

Myth #2: It's only good for you if it's good for you. When the Child Starts Post-Secondary School

This fallacy is widespread because most parents purchase the best child education plan in order to help their children achieve their further education goals. As a result, when your child reaches the age of 18, you will get a lump sum payment. This is the moment when s/he will begin undergraduate education at a university. You may, however, elect to utilize the funds towards your child's hobbies, business ventures, or even marriage.

Myth #3: If the Policyholder Passes Away, the Policy Will End.

The fact is that you have complete control. If you want the plan to continue and accomplish the financial objective, you can select the option at the time of purchase. If you choose this option, which is also known as "Premium Protection," the insurer will continue to make further investments in your policy. As a result, if a parent (policyholder) died unexpectedly, the family would get the Sum Assured and the policy would continue. Premium payments in the future would be waived.

Myth #4: Due to inflation, it may not be able to meet future education costs.

You may choose from a variety of Child plans, some of which also allow you to participate in equity funds. Equity is a high-risk, high-reward investment that can outperform inflation over time. 

Myth #5: Death Benefits are Only Given in Lump Sums 

Milestone-based payouts are authorised even after a parent's untimely death, and partial withdrawals are permitted. The Sum Assured is paid out as soon as the person passes away. To relieve the family of financial strain, future premium payments will be waived. The family would get the fund value at the end of the period.

Myth #6: Policy Claims Are Frequently Rejected

Before enrolling in a Child life insurance plan in India, look at the settlement ratios, customer service reviews, and established deadlines.

Myth #7: The Policy's Terms and Conditions are Complicated to Understand

Your insurance adviser would be pleased to walk you through each of the features and benefits if you have any questions or want someone to explain the policy in depth. 

Myth #8: Benefits are only available once the plan has expired.

This is all up to you. You can choose to receive payments depending on milestones or make partial withdrawals (subject to the availability of some minimum defined fund value). You could have planned to update your automobile in 5 (five) years or take a dream vacation in 7.

Myth #9: It's just good for paying for college.

There is no such need. You may use it to help your youngster start a business or pay for his fitness training. A Child insurance plan is linked to education since the investment outperforms inflation over time, provides a corpus fund in the event of a parent's death, and offers ongoing assistance until the policy period ends.

Myth #10: Liquidity is a problem with child plans

Child plans are more liquid than adult plans because they allow for more flexible withdrawals. After five years of investing, you can take the money from the Child plan. Because of the tax-saving aspect of the scheme, authorities have imposed this lock-in term. You can choose between regular cash inflows and a lump-sum corpus payout at the conclusion of the payment term. 

Conclusion

If you accept any of these myths, it's time to confront the facts. Child plans are the only instruments that guarantee a stable future for your child even if you die young. So, if you're a parent, learn about the advantages of a Child plan and get one.

Also read: Child Insurance Plans: Know All About Them

Is Aditya Birla Sun Life Insurance Child Plan good?

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.