Protecting A Growing Family

Varun Sharma had played basketball in school. He was a tall and lanky young man, full of fun and the joy of life in him. He had a solid job in the marketing department of an up and coming internet Services Company, and his talents were beginning to get recognized by the big bosses. The world was a bed of roses for young Varun.

Life got even sweeter when Varun met Pooja at an office party. She was part of the accounts team, and a lovely girl. They dated for a few months and got married before long, with the blessings of both sides of the family.

A few years passed and Pooja was pregnant. It was the happiest day in both Varun and Pooja’s life when little Aarav came into the world. They were both convinced that he was the cutest little boy in the whole world! Since looking after Aarav needed every bit of Pooja’s energies, she quit her job to be a full time mum. But she was not worried at all. They had just celebrated Varun’s promotion as a senior manager. The future couldn’t look any brighter.

Pooja was taking little Aarav for his afternoon walk in the park when her phone rang. That phone call marked the beginning of a life altering day for Pooja and Aarav. Varun had suffered a huge stroke as the result of a ruptured brain aneurysm and had been rushed to the hospital. Though a team of surgeons did their best, Varun did not survive. He was just 30.

Pooja had little memory of the events of the next few days. When the mists cleared, she realized that she was looking at a hefty hospital bill that was yet to be paid, the installment on their home loan was coming up shortly, and there was barely enough money in their joint bank savings account to tide them through the next three months. It was a catastrophic situation for Pooja when she realized that the Medical insurance Varun had through his company was not even going to cover half the hospital expenses. Varun had no money put by for exigencies; he hadn’t even taken out a life insurance. The future had always looked so good and death had been such an unthinkable possibility, that Varun had never thought to take action and protect his growing family. Now what was Pooja to do?

At this point, Varun woke up from his nightmare shaking and sweating! He sat up and struggled to breathe. His relieved glance fell on Pooja who was sleeping peacefully next to him and then on Aarav, who seemed to be tossing and turning. Varun got out of bed and picked Aarav up from his crib and held him close. Varun vowed that his family was too precious to risk in the face of uncertainty. If something were to happen to him what would become of them? And his elderly parents? He would take action immediately.

The very next day, Varun set about creating an insurance strategy that would take care of his family’s needs. He realized he needed insurance in several areas to keep his family protected.

1.       Life insurance for himself.

2.       Additional health insurance cover for his family and his aging parents – apart from the group health insurance his company gave him.

3.       A child insurance plan which would pay for any higher education that Aarav opted for.

4.       A retirement plan that would make sure that Pooja and he could enjoy the same lifestyle that they were accustomed to even after he retired from full time work.

Once Varun started to investigate, he found that the market offered him a plethora of options. He remembered that Gagan, his college buddy was now an insurance broker. Gagan was able to help Varun pick the right kind of insurance products to protect his family against exigencies and craft a sound, long term financial plan.

The first thing that Varun did was to take out an Endowment Plan on his own life for the next 30 years worth Rs. 1 crore. This type of policy covers the risk of death of the policy holder. If Varun survives the policy duration, he would get the sum assured (i.e. Rs. 1 crore) plus a return of 5%. In case Varun dies during this period, his family would still get the sum assured and the returns. Though this policy had higher premium payments than the other alternative, Term Plans, Varun felt he had made the right choice. Term plans had considerably smaller premium payments, but would not give any payouts in case Varun survived the policy period.

Varun’s next step was to take out a health insurance policy, which covered hospitalization and domiciliary expenses for himself, Pooja, Aarav and his parents. He also took out a policy for Pooja’s parents. This was a more comprehensive policy than the group health insurance he had through his company and had a higher sum assured.

When the basics had been covered, Varun looked at securing Aarav’s future. He wanted Aarav to become anything he wanted, and study at the best educational institutions in any country of Aarav’s choice.  He looked at all the different Child Plans that the insurance companies were offering, and finally selected a child plan with a money back option.  The best thing about this plan was that the some part of the sum assured would be returned periodic intervals through the policy tenure, with the remainder being paid out when Aarav would be 18 years old. The periodic payouts would take care of expenses like school admission costs, professional coaching and entrance exams when Aarav would be ready for college, and then the remainder could be used to fund Aarav’s higher educational goals.

Varun’s long term endowment plan would come to maturity when he turned 60 years. By then, he saw himself as a retired man enjoying a peaceful life. He planned to invest the maturity amount in a pension plan (also known as an annuity) so that he and Pooja can receive a fixed monthly income for the rest of their life. Varun looked forward to this phase of his life, where he would have the time to finally enjoy himself – pursue his hobbies, travel the world with Pooja. He vowed to work hard during his working life to make this dream come true.

Needless to say, from that night onwards, Varun slept soundly and was never troubled by nightmares again.