The biggest and the most hectic financial task for most Indian parents is meeting the overwhelming and steeply-increasing cost of education. The survey by the National Sample Survey Office reveals the cost of education has drastically increased by 175% between 2008 and 2014. Moreover, the cost of higher education has risen by 96%. Resultantly, it is becoming critical for parents to plan for their children’s higher education. 

There are multiple child insurance plans offered by many insurance companies. These child education plans can help parents to cope up with this ever-increasing cost of education. However, the myths surrounding these child insurance plans seem to be the biggest mental block causing parents to be reluctant to buy a child insurance plan for the brighter future of their child.

Here are four common myths and facts about child insurance plans.

Myth #1 About Child Insurance PlanMyth of About Child Insurance Plan

Child Insurance Plan covers the child’s life. Hence, it is a bad omen to buy Child Insurance Plan.

The Fact: This is one of the most common misconceptions that surround Child Insurance Plans. In Child Insurance Plan the life insured is not the child. Most child insurance plans ensure the life of the earning parent, and not the child. It is referred to as Child Plan because it helps the parents fulfil the child’s dreams and aspirations.

Myth #2 About Child Insurance Plan

The death benefit of a child insurance plan is paid out as a lump sum upon the death of the insured. It does not take care of the future financial needs of the child.

The Fact: The future benefits vary plan to plan. However, most of the child insurance plans extend benefits such as family Income benefit, which ensures that periodic payouts are made to the family, this takes care of the child’s future educational need in absence of the earning parent. These payouts are in addition to the lump sum that is paid out immediately upon the death of the insured parent.

Myth #3 About Child Insurance Plan

Child Insurance Plans are not sufficient to cope up with inflation.

The Fact: There are multiple child insurance plans available today. Of which, market-linked child insurance plans invest your money in the equity fund, hence, generates higher returns. It is therefore very essential to understand your requirement and then choose the appropriate child insurance plan that suffices your need

Myth #4 About Child Insurance Plan

Child insurance plan lacks liquidity. Once your investment in a child insurance plan, your money gets blocked for the entire policy term.

The Fact: Child insurance plans are flexible and have easy liquidity. As far as traditional child insurance plans are concerned payouts are made at several pre-determined intervals. On contrary, a market-linked child insurance plan will give you the flexibility to make partial withdrawals after the completion of 5 years policy term.

To invest for your child’s bright future, do take an informed decision. To know more about child education planning and how much do you need to invest click here! 

Deepak Sir
Deepak Dhabalia
Wealth Coach  


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