Child insurance plans are designed for creating a secured financial oeuvre for your children. The plan includes a premium waiver benefit which can stop the future premiums if the child’s parent/parentsdie during the tenure of the policy. Although the plan is significantly beneficial for the future of your child, there are many myths associated with it that can prevent you from buying a child plan. Therefore, we have discussed some common myths regarding child plan along with their reality to help you make a doubt free decision.
There are generally two types of child insurance plans, one that covers the child and the other that covers the parents. Usually, it is recommended to choose a plan that covers the life of the parents along with the child. In the event of the parent’s demise, the premium waiver rider triggers and the plan continues till its maturity.
The beauty of a child insurance plan is that it doesn’t end with the demise of the parents but includes a premium waiver rider inbuilt which becomes effective after the death of the parents and allows the insurance company to pay the future payments till the maturity of the policy. If the parent was covered under the plan, the death benefit is given immediately on the death of the parent. When the child insurance policy matures, the promised maturity benefit is paid again without affecting the continuity of the child plan.
A child insurance plan does not burden any restriction on the use of the plan’s benefits. When the plan benefits are paid, they are not only for the child’s education but can be used in for any purpose.
Many of us have a debate against the child insurance plan that it does not cover many inflated costs of the future. Child insurance policies also are offered as unit-linked insurance plans (ULIPs) in which your premiums will be invested in the capital market so that they can grow according to the growth in the capital market. Capital market growths are inflation-adjusted therefore, the child ULIPs provide enough corpus for meeting inflated costs in the future.
Insurance plans have a long-term perspective that makes you believe in this myth. When you buy a traditional child plan, you get the option of accessing the policy loans only after the first two or three years. This loan facility also gives you access to your funds whenever necessary through partial withdrawals with the help of child ULIPs.
If you still believe in any of the above-mentioned myths, it’s time to explore the reality because child plans are the only tools that can secure your child’s future in case of your early death. Therefore understand the benefits of your child and choose the perfect one as a responsible parent.
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