A new parent’s life is filled with happiness and hopes with the birth of a child. However, a new child also brings in a whole set of responsibilities and challenges.

Having and raising a child requires careful financial planning. Pregnancy and childbirth involve doctor visits, medicines, nutritional supplements and finally the delivery of the child. The pre-natal and post-natal care involves significant expenditure.

Once the child starts growing up, the parents need to start building a corpus for their future needs. Additionally, the biggest concern for the parent is the well-being of the child in case of any sudden eventualities. What will happen to the child in case the parent meets with an untimely demise? This brings in the need for life insurance.

A young parent is already balancing the joy and challenges of being a new parent. To ensure they rest assured about the financial planning and insurance for parents, we have compiled this quick guide.

If you are a young parent, read on to understand the importance of life insurance and financial planning and how to go about it.

Important Types of Life Insurance for Young Parents

• Term Insurance: A term insurance offers a pure life cover. You get extensive coverage  at affordable premium prices. Having a term policy is extremely important for a young parent. The extensive sum assured will help secure the child’s financial future. It can fund their education or marriage while also helping the surviving parent pay off any outstanding liabilities.
  
  You can check out Tata AIA term policies with comprehensive coverage, where we combine the benefits of an online term plan with a range of pre-integrated features like critical illness benefit, hospicare benefit, accidental death benefit and accidental total and permanent disability benefit.
  
  Your child is completely dependent on you for all their requirements. Ensuring that they are protected through all eventualities, such as diagnosis of a critical illness for a parent, parent’s hospitalisation, permanent disability, along with a life cover, allows you to rest assured about their future.
  
• Guaranteed¹ Returns Plans or Unit Linked Insurance Plan (ULIPs): Life insurance plans with maturity benefits allow long-term savings and wealth creation.
  
  You can save for your child’s future needs with a life insurance savings plan that combines assured returns and life cover.
  
  If you wish to combine life cover with market-linked returns, you can opt for a Unit Linked Insurance Plan. Considering it is subject to market vagaries, you can use a ULIP for long-term planning.
  
  When planning for your child’s goals, do not forget to plan for yours too. You and your partner will have your own financial ambitions, such as starting a business, buying that favourite car, upgrading to a bigger house, going on a foreign trip and so on. Buy a life insurance plan with regular bonus² payouts and maturity benefits to help you achieve these goals.
  
• Retirement Plans: Most parents focus only on securing their child’s future, all the while forgetting to plan for their retirement. Once the children grow up and leave the nest, you should have enough corpus to lead your lives and live your dreams. Retirement plans ensure that you do not have to depend on your children for your needs, even after retirement.