The world is not a safe place anymore. Diseases spread, violence is rampant, not to mention the increasing frequency of accidents. It has become crucial to ensure the lives of everyone, particularly for parents.
Parents have responsibilities towards children. In the event of their demise, the child may be abandoned without any monetary or emotional support. On the other side of the spectrum are your older, retired parents who also need a policy to secure their finances effectively. Let us explore this in detail.
Why term insurance for parents is a necessity?
Term insurance serves many purposes. Based on the type of plan you choose, term insurance for parents can help your child or your parents in handling the many uncertainties of life. Here are some of the top reasons to opt for term insurance for your parents:
- Elderly parents seldom have financial security. They may have an effective pension plan, but there are several expenses that arise with old age. Term insurance for parents helps them navigate these unforeseen financial situations.
- Term Insurance for parents also takes care of their healthcare needs. You can add critical illness covers within the policy to ensure that in times of medical emergencies, your parents will have the required funds for diagnosis, treatment, and hospitalisation.
- Add-ons with term insurance for parents above the age of 60 are eligible for tax exemption up to INR 50,000.
- In the event of the death of one parent, term insurance for parents also guarantees financial security for the other parent.
Aside from the protection for your elderly parents, here are the top reasons why you need term plans yourself as a parent:
- If you have a child and they are dependent on you for their survival, then your death would leave the child completely unprotected.
- You can choose term insurance for parents from the variable options available. Based on your selections, the sum assured for your term insurance policy may increase over time. In the event of your demise in the future, the amount would be sufficient to not only aid in your child’s education but also set them up for a comfortable living.
- Term plans allow you to choose how the sum assured is paid. You can set up a plan such that in the event of your demise, your child receives monthly compensation to deal with their financial needs.
- If you choose decreasing term insurance for parents, then the policy could help you reduce liabilities that would eventually pass on to your children.
Being a parent is a major responsibility. Both your elder parents and your children may depend on you for their every need. Having suitable term insurance for parents guarantees that they can handle their finances easily.
How much coverage is suitable with term insurance for parents?
There are various types of term insurance policies available for parents. The biggest advantage of term insurance is the low rate of premium for the high sum assured. You can choose the coverage for your elderly parents based on their monthly expenses and medical needs. Your children, on the other hand, may require more coverage as they have to plan their entire lives ahead without your help.
Typically, a 25 lakh term plan may do wonders to help your elderly parents navigate their financial responsibilities. The premium for a 25 lakh term plan is most likely to meet the criteria for tax exemption, which means that you save money while investing in their needs. You can add critical illness covers to further increase the medical expenses, thus ensuring that they always have financial aid.
In the case of your children, you may need a lot more than a 25 lakh term plan. With the inflating economy in mind, if you choose a 25 lakh term plan, the payout is likely not to have the same value in the future. It would make it difficult for your children to deal with their education, life stages, ambitions, and any liability that you may have left behind.
It is better to choose term insurance for parents with higher coverage when you need to secure the financial interests of your children. A 1-5 crore term plan may be better suited to provide extensive financial protection to your children in the event of your untimely demise.
Conclusion
Parents spend their lives trying to better the living conditions of their children. Their entire existence revolves around the child’s well-being, dreams, and comfort. Death is an unexpected tragedy that not only affects the psyche but can leave a child completely devoid of support. That is what makes term insurance such a necessity in today’s era.
Be it for you as a parent or for your elderly parents, a term plan can help you navigate difficult financial situations and provide a modicum of relief in trying times.
