Debunking Myths About Buying Child Plans In India
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Child plans are a kind of life insurance plan that is made to create a safe and secured corpus for your children's future. But, despite several benefits offered by these plans, there’re plenty of myths linked to them.
Parents generally do not understand the minute details of the child's plans and stay with preconceived notions that stop them from getting one. In our following sections, we are going to debunk some common myths associated with the child plan for you.
Debunking Myths About Buying Child Plans In India
Let’s bust the following myths about child plans which can affect your investment decisions incorrectly -
Myth #1: Child Plan Offers Just Insurance Cover for A Child
Reality: Any term plan or insurance plan covers an income-earning person, so the same is the case with the child insurance plan. This policy ensures that a child's aspirations and dreams are not let down in the absence of their income-earning parents.
You can also use this policy for various financial goals, like wealth accumulation or retirement goals. For these goals, this plan can benefit your spouse after your demise. Therefore, this policy always covers a parent holding or purchasing the policy.
Myth #2 Child Plan Covers Only the Child
Reality: Many believe that the child plans cover just the child. It is wrong. There are two kinds of child plans, one that covers a child and the other that covers a parent.
Generally, you will find most child policies cover the parent's life. In case of a parent’s demise, this premium waiver rider will be triggered and the plan stays till maturity. Hence, when buying this plan, know if the child plan covers a child or a parent.
Myth #3 Your Child Pays the Premium After Your Demise
Reality: The child plans taken from reputable insurers come bundled with a ‘Waiver of Premium’ advantage. This means, your child will not be burdened with any responsibility of paying for the future premium after your demise. This policy stays active, in case of your absence, since the insurance firm takes it on itself for paying the future premiums.
Therefore, in your absence, the child plan doesn’t get discontinued. But, in such an event, the insurance firm pays the amount to the nominee that will be used for meeting your child’s future needs.
Myth #4 Benefits are Available Once This Plan Gets Expired
Reality: It depends upon you. You can select to get payments as per the milestones or you can make partial withdrawals (as per availability of minimum defined value). You plan to take a new car in five years or go for a dream holiday in seven.
Myth #4 No Liquidity in Child’s Plans
Reality: The child's rules can easily be changed as required. Traditional or money-back plans, and ULIPs, are accessible for these programs. Yearly bonuses in the traditional or money-back plans are distributed at fixed intervals as per the plan's milestones.
On the other hand, the ULIP, allows the consumers to cancel it after five years for payments associated with the child’s education and other child-related costs.
Conclusion
If you accept these myths, then it is time you confront the facts again. Child plans are the only tool that assures your child a stable future even when you die young. Thus, if you are a parent, know about the benefits of the Child plan and go ahead with it.
Also read: High-Return Investment Plans Available For a Child in 2022
