Protecting The Future Of A Growing Family

When 25-year-old Vivek Jain got his first job, buying an insurance policy was the last thing on his mind. A few years later, his younger brother was detected with cancer while his father was to undergo a major cardiac surgery. Jain’s group insurance cover was limited and he had had no option but to break into his savings. Though his family survived the crisis, he had another problem at hand. The money he had been setting aside for his child’s education was used up paying hospital bills. At this point, Jain realized his greatest folly: Had he insured himself and his family today, he would not be debt ridden and on the edge of financial ruin.

Unforeseen mishaps and challenges do not come announced. It’s always safer to invest in certain life insurance policies that will hold you in good stead. Whether you’re a young or a mid career professional, you need to invest in health and life insurance policies along with a solid child plan to meet the needs of your growing family. What you must know is that all these policies give you a tax benefit.

As the term suggests, a life insurance policy is a cover where you pay fixed premiums to an insurance company that provides compensation to your family in case of your death or loss of livelihood.  In the current scenario, there are three types of policies available which you can choose depending upon your requirement and financial planning.

The first type, a Term Insurance policy essentially provides compensation to the family of a policy holder in case of his death. This compensation, also known as the death benefit is given as a lumpsum amount. On the other hand, Unit-linked Investment Policies (ULIP) have the dual benefit of being an investment and insurance, while Money Back Insurance policy  gives the policy holder money back after a fixed time.  The policy holder can either reinvest this money or use it for other purposes. The third type of policy—pensions or annuities are used to create a retirement corpus where you’re required to affix an age for retirement and earn benefits based on that premise.

All of these policies will not only give you peace of mind for yourself and your family, but will also prevent any financial battering in the face of unforeseen mishaps.

Though you and your elderly parents may be covered under a group health insurancecover provided your employer,  it may not be enough. This type of cover usually has limited compensation like Rs 2-3 lakh. In case your ailing parent has undergone a major surgery or has incurred high hospital bills, finances may be impacted. However, if you have bought your parents a health cover, then all additional expenses that your group medical cover could not take into account, will be taken care of. Many insurers have policies that offer coverage to parents/ senior citizens aged between 60-80 years. Always go for a policy where the sum assured is high and offers maximum coverage in terms of serious illness and even if they have a history of pre-existing diseases. 

Your third must-have policy is a child plan. This is more an investment for your child’s future than an insurance cover. The prime objective of life insurance is to protect the financial interest of the surviving members of the policyholder’s family in the event of the death of policyholder. Since children have no income of their own, most plans dedicated to them are essentially saving plans with a layer of protection in the event of parent’s death so that there is no disruption in their education and provide for other basic needs of the life.