Single Parent Insurance: Protect Your Children's Future

Your child deserves the best with or without you. A child insurance plan is like a regular life insurance plan but with specific features that are helpful for children. Usually the age limit for child insurance plans is 91 days up to 25 years.

Such life insurance comes with significantly lower premiums and built-in life cover. And child insurance plans usually come with a guaranteed return on investment.

It's a life insurance policy which builds financial protections for your loved ones. If the policyholder passes away, the nominee gets a lump sum death benefit to continue their life.

This is not an investment policy; it's a pure life protection plan. That's why the term life insurance premium is much lower than any other life insurance. Those looking for single-parent health insurance plans can explore a term insurance plan as well. You get 10-30 years of protection with a term insurance plan.

As the name suggests, a whole life insurance policy gives protection to the insured for his or her entire life. This usually comes with a life cover for up to 99 years. It's a great policy for those who have financial dependents even in their old age. The income received from a whole life insurance policy is tax-free under Section 10(10D) of the Income Tax Act of 1961.

For people who want guaranteed returns with life protection, endowment plans are great for them. If you survive the policy term, you get a lump sum at the time of maturity. And in case of death, the nominee receives a lump sum amount to support their life.

The amount you get at the time of maturity is tax-free under Section 10(10D) of the Income Tax Act of 1961. Moreover, the premiums paid can also be claimed as a deduction under Section 80C (old tax regime).

ULIP plans are great for those who want a combination of investment and protection. It gives the opportunity to create wealth with the help of market-linked returns from systematic investments. Depending on your risk appetite, you can invest your money in bonds, debt, equity funds, etc.

In this insurance plan, you get a percentage of the sum assured at specific intervals. Generally, money-back insurance plans are used for short-term financial goals. Buying this plan can increase your monthly or annual income, as you get some money at intervals.

They also come with a maturity benefit, so you also get a lump sum at the time of maturity. The regular sum you earn is also tax-free under Section 10(10D) of the Income Tax Act of 1961.

This is the most important factor to consider when buying life insurance. Your annual income indicates how much your family needs to maintain the lifestyle you have provided for them. Your insurance coverage should be at least 10 times your annual income. For example, if your annual income is INR 15 lakh your ideal coverage should be INR 1.5 crore.

You need to understand your children’s needs, including their monthly expenses such as school fees, extracurricular activities, special medical needs, and higher education. You must ensure they have enough money to maintain their lifestyle.

If you have taken a personal, car, or home loan, you need to ensure that your annual term life insurance covers the outstanding loan amount as well. You don’t want to leave your family burdened with unnecessary financial obligations.

For example, if you have taken a home loan of INR 50 lakh, you must ensure that the lump sum from your insurance not only covers the loan but also leaves enough funds for your children.

Inflation is increasing at a rate of 6-7% in India. While making any investment or buying a term life insurance, it’s important to take inflation into consideration. For example, if your monthly expense is INR 50,000 today, in 20 years (assuming 6% inflation), you will need about INR 1.6 lakh per month to maintain the same lifestyle.

Life insurance policies offer many riders. Some popular riders include the Accidental Death Rider and the Waiver of Premium Rider. Accidental death is not covered under basic life insurance plans. To ensure your children are fully protected, you can add this rider to your policy.

During the policy term, if you are unable to pay your premiums due to critical illness or death, all future premiums will be waived. Your family will still receive the lump sum in case of your death.

If you have more than one child, it’s ideal to have multiple nominees. When selecting nominees, you can specify the percentage of the sum you want to allocate to each nominee.

Single parenthood comes with unique challenges. If you choose the right life and health insurance, you’re creating a protection for your child’s future. Take this step not just as a financial decision but as an act of love, ensuring that no matter what, your child’s dreams, health, and happiness remain protected.