Marriage and Life Insurance
Marriage and Life Insurance
11/4/18 6:44 AM
Mergers, partnerships and marriages are always welcome. They bring two people/entities together, and help them add value to each other. Riding on luck, hoping they travel the path together and achieve their goals collectively, that they probably couldn’t have achieved on their own. It’s the same whether it’s Vodafone merging with Idea or Vivek marrying Reena.
Marriage is far from smooth sailing. Vivek and Reena are colleagues who want to tie the knot. There are many points they must consider on their proposed ‘merger’.
- Diverse cultures they are from different backgrounds and a clash of cultures cannot be ruled out.
- Creation of immovable assets Vivek and Reena are living on rent today but plan to buy a house of their own later. This may involve opting for a home loan and it will be up-to the two of them to ensure that the outstanding EMIs (equated monthly instalments) are paid off in case of an eventuality to any one of them.
- Family finances They are both earning at present but this may or may not continue, if one of them drops out of their career, it will put added financial burden on the family
- Growing the family In time, the couple will usher in new members in the family, which will involve more money required in the early years of the kids
- Planning for children’s education Everybody wants the best education for their children. Today, even the fees of pre-primary sections in reputed schools may range from Rs 50,000 to Rs 1 lakh plus a year. These costs effectively keep increasing each year as and when your child moves to higher classes till s/he finally reaches college or university. The fee for an undergrad engineering course in India today costs approximately Rs 5-6 lakh, if pursued from a top-tier government-aided college, while this may cost around Rs 8-10 lakh in a private college. The same course would cost upwards of Rs 1 crore, in case you are planning to send your child to a reputed college in the US. Vivek and Reena will need to chalk out a comprehensive financial plan to provide for their children’s future again this will involve making significant investments
- Emergencies the couple may have to confront any one of these contingencies which could put the family under financial and emotional strain viz. job loss, accidents, a serious medical condition
How the marriage can cope with financial distress?
While Vivek and Reena may have to deal with the cultural clash by themselves, there is help they can take in dealing with the financial problems.
Let’s see how.
- Life insurance the first thing that Vivek and Reena need to do is buy a life insurance plan preferably an online term insurance plan which is convenient and cost effective. This will offer financial security to the family and will cover all obligations like the outstanding home loan in case of an eventuality.
- Building an Emergency fund the couple should aim at building an emergency fund of liquid investments to meet unexpected financial emergencies. The emergency fund will provide for financial or health disasters or job loss or any event that takes a heavy toll on the couple’s finances. It is recommended that they save at least 6 to 9 months of living expenses in the emergency fund.
- Savings and Investment Plans Vivek and Reena must aim at saving for their children’s education/marriage by investing in a savings and investment plan. This can be an endowment plan or a unit-linked insurance plan (ULIP) depending on their objectives, risk appetite and investment horizon.
Marriage is not just an emotional connect between two beings/entities. There is lot of financial preparation that goes behind making it work. Couples have help at hand in the form of life insurance and investment plans that can cater to just about every financial need of the family unit.