Often, our financial plan consists of investments that will generate a certain amount of money in the future. However, many of these investment instruments do not factor in the uncertainties of lives.
For every parent, providing the best of education, healthcare, lifestyle, and a good future to their children is perhaps the highest life priority. While parents try their best towards fulfilling this goal, apart from dreams, emotions, and aspirations, it takes a well thought out financial plan to do so. This Children’s Day is yet another reason to take stock of your financial plan and see whether it does enough to give your child the future you would aspire to.
Often, our financial plan consists of investments that will generate a certain amount of money in the future. However, many of these investment instruments do not factor in the uncertainties of lives. Moreover, Covid-19, however unfortunate, has been a great reminder to everyone about how uncertain our lives can be. With a family relying on you financially, Life insurance must be an essential element of your investment mix that you have allocated towards your child’s future. Here’s how life insurance helps in safeguarding a child’s present and the future: –
Protect the downside
Life insurance can safeguard the financial security of the whole family in case of the unfortunate demise of the insured family member. As the family copes with the physical and emotional impact of the demise, the sum-assured amount ensures that the child’s education and other future plans can continue uninterrupted, despite the loss of a regular income. Thus, as a parent, it brings tremendous peace of mind to know that no matter what happens in life, your child’s dreams will not suffer due to financial roadblocks.
Affordable, flexible, and much more
For a life insurance plan, parents can choose among several options, starting from a term life insurance that pays out a lump sum if the policyholder meets an untimely demise within the policy period, for a nominal premium. Term Life insurance is a more affordable and no-frills option. However, parents also have the option to opt for an endowment plan, that offers a certain lumpsum after a pre-decided period. Albeit the premium for an endowment plan could be slightly higher as compared to a term plan. Both term and endowment plans allow you to customize the term length and coverage amount as per your own budget.
Who should opt for life insurance and how to start?
Life insurance should be an essential part of a portfolio of young, middle-income families with children because it covers your life against unforeseen circumstances for a given period of time. By planning, you can ensure that if something untoward were to strike, your family, particularly your children, will be able to manage life’s necessities. Before opting for any life insurance plan, it is important to conduct the due income-need analysis.
Some of the initial questions could be: –
• Do you have an ongoing loan that may fall on the shoulders of your family in case of your demise? (say, home loan)
• How old is your child? How much time she will need to be financially stable from now on? How much money she will need to admit into her dream course or any other plan? Can the insurance cover take care of it?
The list of questions can be much more elaborated, depending on the individual income and other conditions. As a thumb rule, it is recommended to take a term life insurance policy that is around five to 10 times your annual income. You also need to ensure you purchase an appropriate amount of coverage considering your family’s situation. Last but not the least, while we prepare for the joys of life, it is important to deal with uncertainties. The proceeds of a life insurance policy can be used to provide a guard to your child’s dream. Thus, this Children’s Day, start your journey with life insurance as you see your child inch closer to the dreams.
by, Anjali Malhotra, Chief Customer, Marketing, Digital, and IT Officer, Aviva India