The issue creates not much of a problem in case when the nominee of the policy makes the death claim, nonetheless the discrepancy becomes cumbersome for the insured in case of claim for maturity benefits. As the mismatch whether in the name or signature delays the payment of the proceeds of the policy. The same happens as the insurance company now in order to avoid any chances of identity theft or fraudulent claims does an additional verification.
And in order to complete the verification procedure requirement of the insurance company, in a general case when the initials of the insured are not matching with those in the policy document, insurers require the claimant to furnish authenticated signature specimen.
Further, as any discrepancy in name also prevents the insurance company from honouring the claim of the insured, in the case, insured needs to provide the necessary proof and enable the understanding of the insurance company that you are a genuine claimant.
Also, as otherwise in case the name of the insured has changed on account of different other possible reasons, correction in name with the insurance company can be requested by completing and providing all the required document.
For making the request for change in name, insured needs to furnish a request letter along with the attested copy of the proper notification. Also, a copy of the document with mention of the correct name needs to be provided to the authorities. For the same, any document with mention of the insured name such as the bank statement or any other school certificate that is duly attested by the school of the concern is acceptable.
Also, confirmation by the bank manager in the form of attestation in respect of the insured's name, account number, bank branch as well as signature is also required to be furnished.
So, it is at best, to go about with the investment in your child's name only after you have decided on the name, as in the long run it can create issues. Also, regular compliance with the Know Your Customer (KYC) provision of the financial institution also comes at help for early and hassle free claim settlement.