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Child Plans: Myths vs Reality

Always give your presence behind your child's goal achievement

As a parent, nurturing your child's dreams and aspirations is paramount. Planning for their future involves not just love and guidance, but also financial security. Child insurance plans emerge as a popular option, promising a safety net and a path towards building a corpus for your child's future needs. However, a web of myths and misconceptions can often surround these plans. 

Top 5 Child Plans: Myths vs Reality

Let's navigate this together, separating fact from fiction to help you make an informed decision.

Myth #1: Child Plans are Life Insurance for Children

Reality: This is a common misconception. Child plans primarily function as life insurance for you, the parent, with benefits extending to your child. In the unfortunate event of your passing during the policy term, the insurance company pays a lump sum benefit. This financial cushion can significantly aid your child's well-being and future goals.

Myth #2: The Child Receives the Money Throughout the Policy

Reality: While some plans might offer options for periodic payouts, typically, the child receives the accumulated amount as a lump sum upon policy maturity—often coinciding with their reaching adulthood (18-25 years old). This lump sum can be crucial for significant expenses like education, starting a business, or even a wedding.

Myth #3: Child Plans are a Guaranteed Path to Riches

Reality: The returns on a child plan depend on the type of plan you choose.

  • Traditional Plans: These plans offer guaranteed returns. A portion of your premium is invested in low-risk, fixed-income instruments like government bonds. While predictable and secure, the returns might be lower compared to other options.
  • Unit Linked Insurance Plans (ULIPs): These plans offer market-linked returns. A portion of your premium is invested in market-linked funds like stocks or bonds. ULIPs have the potential for higher returns compared to traditional plans, but the returns are not guaranteed and fluctuate based on market performance.

Myth #4: Child Plans are Rigid and Restrictive

Reality: Many child plans offer flexibility. Here's how:

  • Policy Term: Choose a term that aligns with your child's future milestones (e.g., college education).
  • Premium Payment Options: Some plans offer flexible premium payment modes (monthly, quarterly, annually) to suit your budget.
  • Premium Payment Holidays: Certain plans allow for temporary breaks in premium payment without policy lapse (subject to conditions).
  • Riders: Consider adding optional riders for additional benefits like critical illness cover or waiver of premium rider (premium payments are waived if you become disabled).

Myth #5: Child Plans are Only for Wealthy Individuals

Reality: Child plans are designed to cater to a wide range of budgets. Here are some ways to make them accessible:

  • Start Early: Starting a plan early allows you to spread the premium payments over a longer period, making them more manageable.
  • Choose an Affordable Plan: Compare plans from different companies and select one that aligns with your budget and offers the desired coverage.
  • Increase Premiums Gradually: Some plans allow you to increase the premium amount over time as your financial situation improves.

Benefits of Child Insurance Plans

While debunking myths, it's important to acknowledge the potential benefits of child plans:

  • Financial Security for Your Child: In your absence, the plan ensures your child has a financial safety net to meet their needs.
  • Planned Savings & Investment: Regular premium payments create a disciplined savings habit and build a corpus for your child's future.
  • Education Funding: The maturity benefit can be a valuable resource for your child's education, empowering them to pursue their academic goals.
  • Tax Benefits: Premiums paid towards child insurance plans qualify for tax deductions under Section 80C of the Income Tax Act (subject to prevailing tax laws).

Making an Informed Decision

Understanding the reality behind child insurance plans empowers you to make a well-informed decision for your child's future. Here are some key considerations:

  • Assess Your Needs: Identify your child's future financial goals and the sum you aim to accumulate.
  • Compare Plans: Research different plans, understand the features, benefits, and associated costs.
  • Risk Tolerance: Choose a traditional plan for guaranteed returns and lower risk, or a ULIP for potentially higher returns with market-related risk.
  • Claim Settlement Ratio: Research the insurance company's claim settlement ratio to ensure a smooth claims process when needed.
  • Financial Advisor: Consulting a financial advisor can be beneficial as they can assess your situation and recommend a plan that aligns with your child's long-term goals.


Child insurance plans, when chosen wisely, can be a valuable tool in securing your child's future. By demystifying the myths and understanding the realities, you can make an informed decision that aligns with your financial situation and your child's aspirations. Remember, it's not just about accumulating wealth; it's about creating a safety net and fostering a culture of responsible saving within your family.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

Suggested Plans

Bharti AXA Life Smart Invest Guaranteed Plan

  • A Non-Linked, Non-Participating, Life Insurance, Individual Savings Product
  • Guaranteed Financial Returns (Provided policy is in force and all due premiums have been paid)
  • Option to choose from 2 plan variants
  • Flexibility in Policy Term/Premium Payment Terms

Bharti AXA Life Shining Stars

  • Non-linked, non-participating limited pay endowment Life Insurance plan
  • Designed to take care of the financial needs of your child.
  • Flexibility to opt between 2 Maturity Payout Options
  • Flexibility in Policy Term/Premium Payment Terms
  • A great short-term investment option for a child insurance policy.

Bharti AXA Life Child Advantage

  • A Non-Linked Participating Individual Life Insurance Savings Plan
  • Protect Your Child’s Future in Your Absence!