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TERM INSURANCE

Why is it Crucial for Parents to Have a Term Insurance?

Sumit Asrani Sumit Asrani 07 November 2017
4.2 (5 votes)

All parents must a have term insurance plan. After all, a pure risk cover ascertains that your child will be financially secured in case of an untimely death of the earning parent. Read on to know how crucial it is to buy a term plan as parents.

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Have you heard that there's a secret agenda of a little-grown up daughter…and here's the letter to her from her dad that brought tears of happiness.

Dear Princess,

They say, “Time flies.” It was just yesterday, when you were just a toddler and now you are all ready as a grown-up girl, all set to fly and discover your world.

When you had come to visit me in the hospital and said, “Papa, when I'll grow up, I'll become a good doctor and will take you back home with me,” it was the happiest moment of my life, dear.

And on this birthday of yours, even when I'm not there with you, I want you to know that I've made all the financial arrangements to support your studies, so that you don't have to worry about your college fees and higher studies.

In this journey of yours, where you have battles to fight and realms to conquer, I won't be there as a shoulder but I want you to understand that as a father I did my best. And did everything I could possibly do. All I want is to see my little princess in that white uniform with the stethoscope around her neck.

My little princess, let's begin our new journey on your birthday and fulfill those dreams, of yours and mine.

Your Childhood's Superhero,

Father of the Princess.

Imagine the peace of mind that the daughter and her mother must have derived on reading the above letter.

As a responsible parent, it is very important to secure family's future and your child's dream. And the best way to fulfill your child's aspirations and secure family financially, is to have a term insurance.

That said, don't let your family feel that they are alone or left behind, and couldn't live the life you have designed for them. Because when you won't be there, they would be bogged down with the burden of making ends meet without the income flow. And you don't want that.

Let your spouse know you have not only planned their life smoothly while you are there but also when you won't be here. And everything will still be taken care of, even when you are not around.

Let me show you how you can do that.

Term Insurance Plans are Must for Parents

Because every milestone of life comes with more responsibilities.

A new born in the family changes everything. Now, you are no more just a married couple, but a parent. A family with a kid. That makes a picture perfect and a complete family.

As a parent, you start planning everything keeping your child's future in mind. Even if it just means a family tour to a new place. And also about your child's childhood, schooling, college, what to gift when they will turn legal, higher studies, marriage, and so on. You want it everything to be smooth and perfect for them without any bummer.

Then you start thinking about managing your financial portfolio. Financial planning becomes prime important. And then you start looking for some guidance and may seek an expert's advice.

However, one may get overwhelmed with the number of options available in the market that seems viable and most promising option when it comes to secure one's family financially. For instance, an endowment plan, unit linked insurance plan, child plan, mutual funds, etc. But ask any financial guru and the first priority advised will be to opt for a term insurance plan.

A term insurance plan is the best option for parents.

Want to know why?

Read further to know what term insurance is and why it is crucial for all parents to have it.

As a Parent You Must Know What is Term Insurance

Life uncertainties does not knock the door, they just enter, which may leave the loved ones in an emotional and financial distress.

And in between all of these in their growing age till the time they become financially independent, an unfortunate event of an untimely death of the breadwinner may put things upside down in the blink of an eye. In which case, a term insurance would ensure that your family is financially stable and your child gets the best future as you have planned.

Let me tell you how a term insurance could be beneficial to your family.

Why Term Insurance Plan is Important for Parents to Have

The best way to give peace of mind to your loved ones

Life's uncertainties can hit anyone and anywhere. It can be suffering from a critical illness, a stroke, an accident, or even a stampede on a local foot-over bridge causing unfortunate eventualities.

With the help of a term insurance plan, which offers high coverage at a minimum premium against the risk of an untimely death of the breadwinner, one can give peace of mind to their loved ones.

Besides, the insured too gets a peace of mind by making arrangements for his family to lead a peaceful life even when he is not around.

Reading that letter written by her father, the daughter was not only less burdened but also at peace. And undoubtedly, her love for her father would have surpassed that the little heart could ever handle.

When reading the above letter, you must have realized what a wise decision her father had made for his family and to fulfill her daughter’s aspirations. This way both were saved from going through the hardships that they would have to go through otherwise. Her father had made an arrangement for the loss of the income beforehand with the help of term insurance.

The cheapest way to protect your child's dream – Term Insurance

A term plan is cheaper than the most smartphones. Yes, believe it or not, but it is a fact, it is much cheaper than any other life insurance product that provides life coverage.

Let me explain with an example:

Raj, a 30 year old non-smoker can opt for a coverage of Rs.1 crore on an annual premium starting from Rs.8,500, which is far cheaper than most of the smartphones out there.

Age (M)Policy TermSum AssuredMonthly Premium
30 years 35 years Rs.1 Crore Rs.700 approximately

Please note: The prices are indicative and subject to change based on various factors.

You, as a parent, can now shape your child’s dream at a very low cost even when you aren't around.

You don't want your family to suffer like it happened to Mr. Ajay's family!

Mr. Ajay, at 40, unfortunately met with an accident, which left his family in shock and financially unstable.

Mr. Ajay’s son, Rahul, who was just 10 years old was left emotionally bereft. Rahul, was clueless and completely helpless.

And Ajay’s wife, who as a homemaker and a single parent was left in an emotional trauma and financial crunches. Ajay’s wife had to struggle to meet monthly expenses by taking new responsibility of becoming a home-tutor. What was worst was that to pay-off the debts and continue Rahul’s education, she had to sell her house. And move back to stay with her parents.

In her own words, Ajay’s wife said, “It’s a fight to live even as a mediocre life without any cash flow. And to continue Rahul’s education in the same reputed school is not possible anymore, and now, Rahul’s dream of becoming an engineer would be just a dream.”

What Mr. Ajay as a parent could have done to protect his family financially?

Mr. Ajay, as a responsible parent, could have bought a term insurance offering a coverage of Rs.50 lakh or so by paying a premium as low as Rs.8, 000 or so. The sum assured received on filing a claim would have been of great financial help to his family.

Mr. Ajay’s wife as the nominee would have received the whole sum assured to support the livelihood. This would had given his family more money to carry on with the rest of her life and fulfill Rahul’s dream of becoming an engineer.

Term insurance for Couple – Joint Term Insurance for Parents

Here's what all the life insurance companies are doing to help all parents. They are offering joint term insurance plans for the married couples. As parents, you can opt for a joint term insurance plan.

Joint term insurance covers both the parents. A joint term plan can be bought when both the parents are working and also even when only one parent is working.

In a case, where both the parents pass s away at the same time, the legal heir will receive the coverage amount. This way, you as a parent are leaving a lot more than just a legal heritage and life long’s savings.

A joint term insurance is another surest way for parents to provide financial security to their children, even in case where both the parents are not alive for child’s upbringing.

Recommended Read: Which plan to opt as parents – Joint term insurance or two separate plans?

What's more – Term insurance premiums and payouts get Tax Benefits

This comes as an additional benefit of buying a term insurance, you can avail tax benefits. All the premiums paid are deductible from taxable income under Section 80C of the Income Tax Act. And the payout received in case of claim is completely tax free under Section 10(10D) of the Income Tax Act.

That means, your family, spouse and children, will receive full coverage amount, which will provide them life-long financial support.

Handpicked Guide to Buy Term Insurance for Parents

It is crucial to buy a right term insurance as a parent.

The following simple steps will help you to choose the best term insurance plan

  • Assess how much cover would you need to provide financial security to the family.
  • Thumb rule to buy a term insurance is to have the sum assured equivalent of 15 - 20 times the annual income.
  • Once you have planned the basic coverage, go online and compare term plans.
  • Enter your age, annual income, lifestyle detail, and compare term insurance plan.
  • Compare term insurance plan details, check inclusions and exclusions, and premiums offered by different insurance companies.
  • Assess if you need to buy an additional optional rider.
  • Check if the required rider is available as an in-built feature in any of the term insurance plan.
  • Seek experts' advice if necessary before purchase.
  • Inform about it to the nominee.

Let me simplify the process of assessing the needs and requirements to buy a term insurance as a parent.

The below questionnaires will help you.

Questions you should ask before buying term insurance as a Parent

  • How long your child will be financially dependent on you?
  • How long your children will be financially dependent on you? If they are in their teens, then consider how long it will take them to be on their foot.
  • How much coverage would be appropriate?
  • At what age you will retire?
  • Is your spouse working? If yes, then how long will he/she be working?
  • Can you consider a joint term insurance plan as parents?
  • Should you opt for a lump sum, income replacement or increasing income replacement term plan?
  • Do you have any liabilities? If yes, how much is the amount and when your liabilities will end?

These questions will help to narrow down your actual needs. Further, it will help you decide the right term insurance as parents.

Note: If both parents are bread earners, it is crucial for both to have term insurance policies, which would build a bigger corpus for their child.

The Perfect Way to Buy Term Insurance as a Parent

Compare term insurance plans online

Today, there are so many life insurance companies providing term insurance. On top of that, most of these companies offer variants of term insurance to suit different needs. In a way, as a parent you can customize term insurance plan as per your needs.

But how to customize term insurance plans?

Or how can you find the perfect term insurance plan as a parent?

The key to find the right term insurance plan as a parent: Compare term insurance plans online.

By comparing different term insurance plans, you get an opportunity to customize the plan and select the most suitable term insurance as a parent.

As a parent you must buy term insurance at the earliest to pay lower premiums

With the increase in age, the annual premium of term insurance increases. It is advisable to buy at an early age. As you will see in the below example, how term insurance premium increases with the increase in age.

Let's say, Akshay, a 30 year old and breadwinner of the family, if decides to buy a term insurance with the coverage of Rs.1 crore till the age of his retirement, 65 years.

You will notice that the delay in buying a term insurance would do no good, in fact, it will only increase the annual premium to be paid.

Age Maturity Age Policy Term Annual Premium (Range in Rupees)
30 year 65 years 35 years Rs.8,000 – Rs.12,500
35 year 60 years 30 years Rs.10,000 – Rs.15,500
40 year 65 years 25 years Rs.13,500 – Rs.18,500

Please note: The prices are indicative and subject to change based on various factors.

So you can clearly see, if Akshay as a parent, buys a term insurance now, at the age of 30 years, he would be paying lower premiums than if delays and buys at the age of 40 years.

Don't Let Your Child's Dream be Just a Dream: Protect it with Term Insurance

Do worries about your family’s financial security keep you awake at night?

Are you concerned about your child’s future in your absence? Or maybe you would like to provide some financial security to your family so that none of the things that you have planned go awry.

If you have agreed to the above asked questions, it's time to take the right decision before it's too late to be sorry.

Leave an unsaid promise to your child about you being their shoulder all the time.

There might be thousands of other things rolling up on your sleeves. But before it's too late, get expert's advice from Coverfox.com on buying the right term insurance plan as parents.

Here's what you may not know:

Coverfox offers NOMINEE ASSISTANCE PROGRAM: That helps the family of the life assured at the time of claim.

  • Claim Assistance
  • Legal Counselling
  • Financial Counselling
  • Psychological Counselling

Read more about Nominee Assistance Program by Coverfox for Term Insurance Customers

Don't take chances. Stay worry-free. Buy a suitable term plan on time, and give yourself a sense of relief and peace.

But, hey can you guess…the secret agenda of the little-grown-up daughter now?

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4.2 (5 votes)
Sumit Asrani
Written by Sumit Asrani
He's a writer. His blood cells are woven with Hypergraphia, as he breathes in books, he exhales words and sneezes poetry. Captivated by the web-of-words he's trying to escape miraculously as a content writer at Coverfox.com.