Being part of the sandwich generation can be challenging. You are simultaneously raising your children while also caring for ageing parents, which can make financial planning more complex. Securing both generations' future in case of your absence requires prudent choices.
Term insurance is an optimal solution that helps you protect dependents on both sides. This blog examines how term plans can be customised to balance your children's and parents' insurance needs together.
The Dilemma of Securing Two Generations
As the filling in the sandwich, you ensure your children get the best possible upbringing. At the same time, you may be your parent's primary caregiver and financial provider in their silver years. Your absence can destabilise both sides.
When parents pass away, children lose their guidance in education, goals, and marriage. Meanwhile, ageing parents lose physical, emotional and financial support. With prudent term insurance planning, you can continue securing both even after you are gone.
When looking for comprehensive term insurance, insurers like ACKO Insurance offer plans that provide maximum coverage at affordable premiums for your children and ageing parents.
Term Insurance - Ideal for Both Age Groups
Term insurance is the most suitable life insurance solution for dependents of any age group. Here's why it works well for both generations:
Benefits for Securing Children's Future
● Cost-effective premiums: Ensure maximum protection for the lowest premiums
● Comprehensive coverage: Get a sum assured of Rs 1 crore or more
● Long policy term: Keep protection going till kids are financially independent
● Future milestones: Fund for higher education, weddings, etc.
● Wealth creation: Create a corpus that keeps earning even after you're gone
Benefits for Securing Parents' Needs
● Retirement planning: Make up for lost earnings that supported parents
● Medical costs: Cover expensive healthcare needs in old age
● Regular expenses: Pay for routine expenses and comforts
● Caregiving costs: Provide for paid caregiving support services
● Debt repayment: Settle any outstanding loans parents may have
Term insurance uniquely balances both sides of responsibilities. Now, let's see how to optimise coverage for children and parents.
Customising Covers as per Life Stage
Your insurance needs to evolve with your life stage and your family's needs.
Early Stage - Young Family
When you are starting, children are young, and parents are likely independent:
● Prioritise child insurance goal first
● Aim for max cover to fund future milestones
● Opt for a 40-year policy term to cover till the child is settled
● Keep premiums low by buying early when young and healthy
Mid Stage - Expanding Family
As you progress, children grow up, and parents slow down:
● Child goals sustain, now married with own kids
● Parent health is likely to need more support
● Maintain child cover and add more minor cover for parents
● Supplement with health plans for parents' medical needs
Late Stage - Ready for Retirement
With most goals met, insurance needs change:
● Children are settled, so goal-based covers end
● Parent cover gains priority for continued support
● Retirement corpus may require a boost with untimely death
● So, the balance between parents and self
Tax Benefits on Multi-generational Cover
An added advantage of term insurance is that premiums qualify for tax deductions under Section 80C up to Rs 1.5 lakhs annually. So, you can lower taxable income by claiming deductions on premiums paid for covers for children and parents. The death benefit received is tax-exempt under Section 10(10D), making the entire process beneficial.
Reviewing and Revising Covers Regularly
Your insurance needs are not static and will evolve over your lifetime as family circumstances change. Children marry and become independent, while parents require more care as they age. Reviewing and revising your term insurance covers regularly is crucial to ensure they align with your changing responsibilities.
● Review the adequacy of covers every 3-5 years
● Increase or decrease amounts as financial needs change
● Add or remove riders like critical illness as health needs arise
● Shift priorities between child and parent covers
● Account for inflation to keep the sum assured relevant
● Move from goal-based to income replacement if needed
● Change nominees if circumstances require it
● Renew covers in time to enjoy continued protection
Conclusion
Sandwich-generation individuals are responsible for financially securing their ageing parents and growing children. Term insurance is the most crucial way to ensure both generations are protected. By buying separate covers and riders or joint plans with a spouse, you can optimise protection on both fronts.
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