There are many myths regarding child insurance plans in the market now. People have a lot of misapprehensions about the different features of such plans and hence, they hesitate to go for them. This can put a huge burden on your financial situation in the future, as the price of higher education is increasing significantly in these times.
Myth #1: The child plan only offers insurance cover for the children.
This is not completely true, and, in most scenarios, the plan offers life cover for the parent too. This enables you not to worry about the financial well-being of your children, even in your absence.
When you opt for the tenure of the plan according to the age of your kid, you can plan it in a way, that you get a lump sum when the child becomes 18. Many plans provide regular lump sum amounts annually after the child reaches the age of 18. This can go on until the maturity of the plan. In this way, the educational requirements of your child can be taken care of.
In the event of the death of the policyholder, the policy remains active and all the benefits will be passed on to the children at a suitable time.
Myth #2: The plan is best only when the child wants to go for higher studies.
This is false, and you can effortlessly claim benefits when the child attains 18 years of age. There is no need for your child to enrol for higher studies to get the payout from the plan.
Many people plan the policy term in such a way that the benefits can be retrieved when the child enrols for higher education. This helps because the cost of primary education is not much but may rise sharply when applying to colleges. Hence, getting a lump sum from the plan at the right stage becomes very crucial and some child insurance plans can be customised to serve this purpose.
Myth #3: You have to wait till the end of the policy term to get money.
This is not true, and you can get loans from the policy within a few years of its commencement. Likewise, when you choose ULIPs, you can make partial withdrawals whenever you need money.
Even with a partial withdrawal of money from the plan, you can continue to get benefits for the remaining amount of money invested. This is a major advantage and you can cash out your savings at the right time when the market conditions are good.
Myth #4: The policy ends after the death of the parent.
This is the most common myth. The future of your children will be protected even after your death when you choose this plan. You will also be glad to know that the plan offers an option to receive all the benefits without paying future premiums, in case of the death of the insured parent.
To meet the emergency needs of the family during the demise of the parent, the policy even offers a lump sum at the time.
These are some of the most known misconceptions surrounding child insurance plans and you should do a thorough research before you purchase them. You can even use a child plan calculator to assess your funds and returns before buying one.