Some Myths About Child Plans You Should Stop Believing Right Away!

A child along with bundles of joy and happiness brings a bunch of additional responsibilities to a parent’s life.One of the most important responsibility that a parent has towards their child is securing their future financially. Child Insurance Plans bring in the adequate financial corpus at every milestone in your child’s life so that all their future dreams are fulfilled even if you are no more around to support them.

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In this article, we will know about all the misbeliefs behind buying a Child Plan that causes reluctance in parent’s minds while going for a Child Insurance Policy.

What is a Child Plan?

A child insurance plan is an investment plus insurance plan offered by many companies for the safety of your child’s future dreams and goals. It offers life cover and provides flexible playouts during all the crucial steps in your child’s life. A child insurance plan is one of the best ways to save a good amount of money with regular investments for your child’s future.

With so many child policies in the market, misconceptions tend to make rounds as well. To avoid these confusions here are some common myths that people generally tend to believe and are left in the dilemma of whether to buy a child plan or not.

Don’t worry! Read these common myths and get to know the exact reality behind them so that you can make an informed decision in the end.

Myths vs Reality

  1. Myth: Child plan covers the child’s life

    • One of the most common myths is that a child’s plan covers the life insurance of the child. No, that is completely untrue. The truth is that it is the life of the income-earning parent that is secured. The benefit of a child plan for your child is that, even if the earning parent passes away, unfortunately, the child’s future is fully secured financially.
  2. Myth: Child plan ends after the demise of the parent

    • Many child plans have the feature of Family Income Benefit. This benefit ensures that timely payments are made to the familyof the deceased so that they can take care of the child’s educational needs. Also, if the policy offers the advantage of financing premium wherein the future premiums are borne until development by the safety net provider and the development advantage is paid to the beneficiary. It is to take note that these advantages are added to the singular amount that is paid out upon the demise of the safeguarded.
  3. Myth: Child plan only meets child education cost

    • The answer would be no. Child plans do not levy any restrictions as to how the invested premiums in the plan benefits are to be used. This means that the child can use the benefits under the child plan in a way they please. In case your child decides not to go for further studies or you might want to utilize the assets to satisfy some other responsibility, you can do so regardless of the first objective that it was planned for.
  4. Myth: Child plan lacks liquidity

    • One of the most common misconception around child plans is that people think that once you invest in the same, your money gets blocked for the entire policy term. A Child plan is quite flexible if you opt for a market-linked plan. This plan gives the benefit of partial withdrawal in terms of emergencies post the completion of certain years as mentioned in your term policy.
  5. Myth: The Child plan is not very transparent

    • Just like all the other plans in the market, Child plans also come with their terms and conditions which are clearly stated in front of the policyholder before buying a policy. The policy documents give a clear breakup of the various charges and the premiums that are to be vested in the policy. So, transparency can never be an issue unless not bought from a trustworthy website.

    When it comes to planning a child’s future, every parent becomes very critical. But, instead of panicking and being worrisome, every parent should try taking an informed decision. Here are some key features and benefits of a Child plan that will also help you make an informed decision.

Types of Child Plan

Broadly, these are the Child Plans available in India:

  1. Child ULIP

    Child ULIP comes with 3 pronged advantages broadly. They are as follows:

    • High insurance coverage
    • Disciplined investments
    • Participation inequity market
  2. Unit Linked Insurance Plans

    The payouts at the time of maturity of ULIPs are determined by the market. This is a great plan for long tenures, say, more than 10-15 years. Companies provide options between different investment funds, allowing you to receive more money than you invested.

  3. Traditional Endowment Plans

    These are simple plans that provide stable returns in the form of bonuses over the sum assured. Generally, under Traditional Endowment Plans, bonuses are paid from the 2nd year onwards.

Key features of Child Insurance Plan

A Child insurance plan comes with many useful features to ensure a rewarding return and protection for your child. Here are some key features of the best Child Insurance plans in India:

  • Capital guarantee
  • Waiver of premium
  • Partial payments
  • Sum assured
  • Tax benefits
  • Immediate financial protection
  • Loan benefits

Additional riders

Certain riders are available, which give you more than just a simple life insurance policy. These riders are available in three sub-categories:

  1. Accidental Death and Disability Benefit

    The Accidental Death and Disability Rider Benefit pay the extra sum assured in the event of your unfortunate mishap causing death or disability

  2. Premium Waiver Benefit

    This rider may be already added to the best child education plan, so check your policy document in this regard

  3. Critical Illness Rider Benefit

    Critical Illness rider benefit offers coverage for a pre-determined set of critical diseases

Benefits of Child Insurance Plan

  • Flexible payment of funds
  • Secured loans are available
  • You can choose from either ULIP or Endowment plan
  • Flexible premium payment options
  • Funds available on the demise of the insured or after the maturity of the policy

Basic Documents Required While Buying a Child Plan

  • Age proof
  • Identity proof
  • Income proof (of the buyer)
  • Address proof (of the insurer and the insured)
  • Proposal form


Every parent needs to plan their child’s future so that they can cope up financially. The early you start the better returns and results will be attained under Child Plans with much lower premiums in the long run. Take an informed and educated decision for a child today and see him fly like a bird with no worries in the future.

Written By: PolicyBazaar - Updated: 20 August 2021

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