2 types of life insurance investments for single parents

2 types of life insurance investments for single parents

Parenthood can be an exciting yet the most challenging phase of your life. When you become a parent, your child depends on you financially to meet their needs until they settle. Since your partner might share the responsibility equally, you wouldn’t have to worry about any financial burden in the future.

On the other hand, there can be times when you might single-handedly take the responsibility of your children due to an unfortunate event like a divorce or death of your spouse. According to a report in 2019, single parents head over 13 million households in India. As a single parent, you might have to fill the void of your other spouse. While you might fulfil you’re the financial requirements of your children until you are alive, have you imagined their financial turmoil in your absence?

There are different insurance policies in the market for the financial security of your children. While selecting a life insurance product, you might stumble upon the two most popular choices: term insurance and a Unit Linked Insurance Plan (ULIP) plan. Since both these life insurance investment tools can safeguard your child’s future in your absence, let’s understand these types of investments in detail:

  1. Unit Linked Insurance Plan (ULIP)

During your active years, you might work hard to build a safety net for your children. As a single parent, you might have to overcome all the financial setbacks to protect your child from the eventualities of life. Therefore, you might end up saving more than usual for your child’s bright future. Rather than parking your money in your bank account, you should start investing in a ULIP plan after you start earning at a young age.

When you invest in a ULIP policy at a young age, you can build a large corpus to meet your child’s life goals like higher education, dream wedding, and so forth. For instance, if you invest Rs. 5,000 at 30 years, you can generate a corpus that is worth Rs. 75 Lakhs by the time your child reaches the milestones. The accumulated corpus from your ULIP plan can help your children to manage their finances in the future in your absence.

A ULIP plan can be a long-term investment solution. It has a lock-in period of five years. During the on-going tenure, you should pay the premiums regularly. However, if you have a waiver of premium feature or a rider, your insurer can waive the premium off after your demise. That way, your children wouldn’t have to possess the financial burden of paying the premium when they aren’t financially settled to do so.

  1. Term Insurance

Many single parents might be under the wrong notion that they wouldn’t be able to afford a term insurance policy. However, term plans are relatively affordable that can offer high coverage than other life insurance products. A term plan is a protection plan that primarily aims to look after the financial well-being of your loved ones after your demise.

Although term insurance is affordable, you can ensure you receive a policy at a relatively cheaper rate than usual. Let’s go through the following ways to pay a low price for term insurance:

  • Purchase a term policy at a young age

Due to the less severity of diseases at a young age, your insurer might provide you with coverage at a low rate.

  • Opt for an online term policy

An online term plan can be transparent and affordable since there wouldn’t be an involvement of the third party or an insurance agent.

In a nutshell, the life of a single parent can be challenging. If you plan your finances and purchase a life insurance in advance, you can remain stress-free about your children in your absence. However, you should consider your child’s financial goals and plan and invest accordingly. In the end, the happiness on your child’s face can make your struggle worth it.

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