Constantly trying to have a work-life balance can lead to negligence in financial planning. Many parents who have kids younger than the age of 18 do not have life insurance or wills. Those who have a term life insuranceare not sufficiently covered. The sum assured is not enough to replace the income of deceased parents or to pay off the outstanding debt. It is a wake-up call for parents with young kids. It is time to sit and think; what if something happens to you today? Not many are willing to deeply think about the risk of death. Very few parents have a will and many have not updated it. This makes us wonder about the reasons as to why parents do not have wills and life insurance plans.
Often, young parents get completely involved in thinking about their children and start doing financial planning for them instead of worrying about their own financial future. Life insurance is an important investment instrument that you need to consider if you are a young parent. The idea is to have an amount that is ten times your annual income. However, the type of life insurance plan that you need to invest in depends on the future financial requirements of your family and your life goals.
There are variousbenefits of life insurance. If you wish to ensure that your loved ones are financially secured when during your absence, you must invest in such a plan at the earliest. A term insurance plan will protect you from the risk of death for a specific tenure. In case of an unfortunate demise, the insurance company will pay the sum assured to the nominees. However, there is no maturity benefit associated with the plan.
Besides considering life insurance for parents, you also need to draft and revisit your will. It is very important to ensure that your assets pass to your kids in the most appropriate manner. You need to name a guardian who will care for your kids if you and your spouse pass away. Update the beneficiaries on assets like life insurance policies, which transfer automatically incase something untoward happens to you.
If the sole reason behind avoiding life insurance is the cost associated with it, you need to understand that a term plan is the most affordable life policy. It covers you from the l the risk of death. You can choose to add riders such as a critical illness rider or an accidental death benefit rider in your term plan as per your needs.
Consider your personal goals, health, and financial needs of your loved ones before choosing a plan. You need to be careful while choosing the sum assured and policy tenure. Take your time and do not rush while making this decision.
As a parent, it is your responsibility to ensure that your children are taken care of and that they achieve their goals, even when you are not present with them. Hence, invest in a life insurance plan at the earliest possible and live peacefully without any mental stress.