Many people are worried about how their family members will cope with the day-to-day expenses or how they can achieve their financial aspirations, especially after they are no longer around. Buying a life insurance plan is an ideal option as it is one of the best investment instruments that can secure the financial well-being of your loved ones in case of an unfortunate event.
Various life insurance policies are available in the market. However, it is advisable to invest in a term insurance plan, as it offers a high sum assured at a reasonable premium. Purchasing a term insurance policy should be on top of your financial planning list, especially if you are a single parent. Raising a child single-handedly is difficult, and the financial risk is high due to the uncertainty of life.
How much term insurance coverage do you require?
The sum assured that you choose should be sufficient enough to help your dear ones meet the household expenses, education and other needs of your child, medical expenses, and other long-term financial goals.
Here are some factors that can help you decide on the right sum assured:
- Your annual income
The basic thumb rule of selecting a sum assured for a life insurance plan is that it should be at least ten times your yearly income. It assures that your family lives a financially independent life and maintains their standard of living in your absence. The term insurance policy can safeguard your child’s financial future and can act as a source of income in your absence. Before you buy term plan online, it is necessary to ascertain the coverage amount. The better the coverage, the higher the premium. Here, it becomes vital to determine the premium you can afford to pay throughout the tenure of theterm insurance policy.
- Your child’s requirements
Your child’s age and needs can highly influence the sum assured of your term insurance policy. The cost of schooling andhigher-educationis increasing significantly.So, if your child is younger, you will have to consider the education-related expenses as a priority while choosing the sum assured. In such a case you will need high life coverage. On the contrary, if your child is old, you can opt for a term plan with low coverage. Besides this, you should consider the other needs of your child,like their medical needs in case of a special child or finance required for his or her wedding in the future.
- Your liabilities
You do not want your child to face monetary hardships when you are not there to take care of him or her. If you donot have the right financial plan in place, your assets can be utilizedto clear the outstanding dues. If you have any debts, it is advisable to pay them as early as possible. Even if you have done proper investment planning, and have bought a term plan, the death benefit that your nominee will receive will be used to pay your liabilities. In such a case your child will not receive the amount that is meant for his or her financial needs. So, opt for a term policy, which can provide sufficient coverage that can take care of your financial obligations and help your child in accomplishing his or her ambitions.
Do not take the future of your child for granted. It is advisable to buy an online term policy and heave a sigh a relief, as you know that your child is financial protected even if you are not around. Decide on an ideal sum assured after ascertaining your income, assets, liabilities, household expenses, and long-term aspirations to secure the economic future of your child and loved ones.