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There are numerous myths surrounding child insurance plans in the market. People have a lot of misunderstandings about the different traits of such policies, and hence, they hesitate to choose them. This can put a lot of stress on your financial situation in the future, as the cost of higher education is increasing drastically in present times.
Let us look at some myths that need debunking.
Myth #1: The plan only provides insurance cover for the child.
False. In most cases, the policy offers life cover for the parent too. This way, you don’t need to worry about the financial safety of your children, even in your nonattendance.
When you choose the tenure of the insurance, choose it according to the age of your children. You should plan it carefully so that you get a lump sum amount when the child approaches 18 years of age. Many policies provide regular lump sum amounts annually after the child reaches the age of 18 years. The lump sum can continue till the maturity of the plan.
Myth #2: The policy is suited only when the child gets enrolled for higher studies.
False. You can easily claim benefits when the child reaches 18 years of age. Your child doesn’t need to enrol for higher studies to receive the payout from the policy.
Many people plan the policy tenure so that the benefits can be availed at the time when the child enrols for higher education. This is because the cost of education rises drastically when applying to colleges. Therefore, getting a lump sum from the policy at the right stage becomes very crucial, and many child insurance plans can be designed to serve this purpose.
Myth #3: You need to wait until the end of the tenure to get money.
False. You can get loans from the plan within a few years of initiation. Likewise, when you select unit-linked child insurance plans, you can make partial withdrawals whenever you need money.
Even with a partial withdrawal of money from the policy, you can keep getting benefits for the remaining amount invested in the plan. This is a notable advantage, and you can cash out your profits at the right time when the market conditions are favourable.
Myth #4: The policy gets annulled after the death of the parent.
False. The future of your child will be protected even after your death. The policy offers a provision to receive full benefits without paying future premiums, in case of loss of the insured parent.
The plan even offers a lump sum to meet the emergency provisions of the family. All these features can help the family handle the pressure.
Myth #5: Policies may not be able to meet the higher cost of education in future due to inflation.
The insurers calculate the sum assured and other features of the policy after taking inflation and other factors into consideration. Rest assured, you will be able to meet the financial requirements of your children in the future by selecting a package according to your existing economic condition.
Myth #6: The death benefit is offered only in a lump sum, and there will be no security in future.
When the parent dies during the duration of the policy, the nominee gets a lump sum amount from the insurer. Also, the policy continues to be active, and the child gets all the benefits after the maturity of the policy.
Myth #7: There is no certainty with the terms and conditions of child policies.
False. All the terms and conditions are always mentioned in the policy document. If you have any doubts, you can quickly contact your insurance agent and get all the doubts explained.
In maximum cases, insurance companies let consumers return the policy within a few weeks from the date of initiation of the policy.
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