Expert busts 5 myths about child insurance

Future. That’s a big word. Scary. Unknown. How much should you save for your child’s education? Should you think she’ll want to go abroad? She might. What about keeping aside an emergency amount for sudden illnesses? Of course. That still might not be enough. There are eventualities that you don’t really want to think about most of the time. But you can’t avoid it forever. What if you’re not around to take care of your child because something happened to you? Then where will everything you planned for her future go?

Did you know that there was such a thing as a child insurance plan? Not life insurance - child insurance. You can secure her future, her entire life if you wish to, if you’d like to. And since most people are still unaware as to how it actually works, there are lots of myths surrounding it, says Yashish Dahiya, CEO and founder of, in his article for He states each myth and spells out what really happens in each scenario, so do read:

Myth 1:Your child's life is covered in a child insurance plan


Typically, parents are covered in a child insurance plan and the child is the beneficiary in case of an unforeseen event or untimely death of the parent(s).

Buying a child insurance plan helps meet the increasing educational and other needs of your child.

A child plan acts as a financial support when your child accomplishes various life stages such as primary and higher education, starting business or even marriage.

Myth 2: Your child will have to pay the premium in case of your sudden death


In the event of your sudden death, your insurer will pay a lump sum amount to the nominee that can be utilised for meeting your child's future requirements.

Typically, this policy does not get discontinued in the event of parent's sudden death.

Most insurers offer 'waiver of premium' rider at the time of buying the policy and your child won't be required to pay any future premium in your absence. Instead, your insurer would take care of future premiums on the behalf of your child.

Myth 3: Payments are made only if your child goes for higher education and if marriage happens


If your child does not wish to pursue further studies or intend to get married sooner, your child can still make a claim.

The objective of a child plan is to secure your child's future by making funds available at the due date.

Therefore, irrespective of the goal the money was tied to, the claim can still be made when the term of the policy ends.

Myth 4: You can avail the payout only at the end of the plan


You do not have to wait till end of the plan to avail the payout. In fact, Child ULIPs allow withdrawing a certain percentage of the fund value after completion of five years from the date of commencement.

In the event of your sudden death, your insurer will discontinue the ULIP and pay the funds to your child.

Myth 5: Your child insurance plan serves only to insure


Your child insurance plan also serves as an investment tool. By investing in a child plan at an early age, you get optimal returns that may come handy as and when need arises.

Opting for the unit-linked insurance plan would help the money grow over a period of time as your child would not require any immediate funds.

I hope I have been able to clear the myths surrounding child insurance. Buy a child insurance plan when you think it's the time, be it the day when your child is born or when your child steps into school.

The sooner you start investing, the better your returns will be in the long-term.