As a father, you have a different role to play in your life. One’s responsibilities change over time as kids grow up and attain adulthood. What remains a crucial link all through is the financial security till the children are on their own and get married to start their journey of life independently. During this period when you see your children grow, you need to ensure that as a father adequate financial security is provided to them till their goals are met.
In an exclusive interview with FE Online on the occasion of Father’s Day, Manish Falor, Chief Financial Officer, Aegon Life insurance, finds out what goals should one as a father needs to secure, how often to review them and other financial and insurance tips that one may make use of.
For a father with small kids as against a father with grown-up children, how different will the approach be while buying life insurance?
Insurance is bought for the purpose of protection. When your children are young, typically below 20 years of age, you have to take care of almost all their needs. This means that the financial cushion that you create and the investments that you make for them need to be robust. Not only will you need to ensure that they are financially secure in your absence but also create a corpus to finance their education, marriage, etc. Thus, you need an insurance plan that can provide adequate life cover along with investment returns.
With older children, many of the responsibilities have already been met. Further, your children might no longer be as dependent on you as they were in their childhood. For example, your child could have finished her education and might even be working.
Further, you would also be older and might have some pre-existing health conditions. Keeping this in mind, you should look for a life insurance policy that has relatively lower premiums and a large payout.
What are those goals that a father can be able to achieve by taking a life insurance policy?
All fathers want to give their children quality education, finance their dreams, and even create a financial corpus that acts as a safety net for them. The right life insurance policy can help you achieve all of these goals.
How often should life insurance needs be reviewed?
Review of any financial investment, including a life insurance policy, should be done either periodically or in the event of a change in circumstances. Generally, if there are no change in your circumstances then it is best to review the policy every five years.
However, if there are changes in your personal circumstances, like marriage, the birth of a child or a significant change in incomes, then that would be a good time to review your life insurance policy.
For fathers who are single parents taking care of their children single-handedly, how important is it for them to have adequate insurance coverage?
While insurance is important for every individual, irrespective of their marital or family status, it is even more important for single parents who are taking care of their children on their own.
There are two aspects to keep in mind here. One, that your health and well-being becomes an integral factor since you are single-handedly taking care of your child. Thus, any reduction in income or increase in medical expenses due to health issues can be detrimental to the savings that you might be making for your child’s future, for example, her education fund. An adequate health insurance policy will ensure that you can continue saving and investing for your child despite unforeseen financial burden.
Secondly, a life insurance cover will ensure that in the unfortunate event of your death, your children are not left financially bare. They can benefit from the proceeds of the life insurance cover.
For those buyers who are not tech-savvy and find it difficult to handle insurance matters, what should be their approach?
Today, innovative digital solutions are being deployed that make the entire insurance buying process easy, transparent, and seamless. The only technology that you really need to understand is perhaps how to use a mobile phone. We can safely assume that a majority of individuals can accomplish that.
So, my only advise here would be that you don’t need to balk at the sound of technology. User journeys are designed in such a way that it makes it easier and not more difficult to buy insurance online. With just a few clicks you can buy insurance, and that to from the safety and comfort of your homes.
What would be that one piece of advice you would want to give all the fathers this Fathers’ Day?
Being a father is a blessing and a source of great joy. However, it is also a big responsibility. You are responsible for the well-being of your family’s present and future. And while that is important, you should also plan for your retirement. Here is my advice for all fathers:
1. No matter how meticulous you are with your finances, failure to purchase adequate insurance can impair your financial future. It is crucial to protect your family with adequate life and health insurance.
2. Along with insurance, it is essential to establish an emergency fund and a retirement corpus. Your emergency fund should have enough cash to cover at least six to twelve months of living expenses. The retirement corpus should be able to cover your expenses and act as a second stream of income for when you are not earning anymore.