Why Life Insurance Is a Must for Parents?

Being a parent means putting your children’s future first—emotionally, physically, and financially. But what happens if life takes an unexpected turn? That’s where life insurance for parents becomes essential. It ensures that your children and family remain financially secure, even when you're not around. Whether you're a new parent, a single parent, or someone supporting growing children, the right life cover can protect everything you’ve worked hard for. Let’s explore why having a life insurance policy as a parent is not just smart—but necessary.

Why Parents Need a Life Insurance Policy in India

Raising a family in today’s world comes with growing financial responsibilities—school fees, home loans, medical care, and everyday expenses. For many households, one or both parents are the primary earners. If something were to happen to either, the loss of income could create serious hardship for the children and surviving family members.

Life insurance for parents in India acts as a financial cushion. It ensures:

• Children’s education stays uninterrupted
• Household expenses are managed without relying on relatives or loans
• Outstanding debts are covered, so the family doesn’t face legal or financial stress
• Long-term goals like higher education or marriage still remain within reach

Uncertainty is a part of life. But the peace of mind that comes from knowing your family will be taken care of—no matter what—is invaluable.

Types of Life Insurance Suitable for Indian Parents

Not all life insurance plans are the same, and the right one depends on your needs, age, and financial goals. Here’s a simple breakdown of options that work well for parents:

1. Term Life Insurance

• Offers high coverage at affordable premiums
• Ideal for parents with young children or financial dependents
• Provides a lump sum payout to beneficiaries in case of the policyholder’s death
• Doesn’t offer maturity benefits (no payout if you survive the term)

Best for: Young or middle-aged parents who want maximum protection during their working years.

Looking for an affordable term plan? You might want to check out Bandhan Life iTerm Prime, our best-selling term plan.

IN ULIP, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.

2. ULIPs (Unit Linked Insurance Plans)

• A combination of life cover and market-linked investment
• Part of your premium goes towards life insurance, and the rest is invested in market-linked funds
• Helps build a corpus over the long term, which can support higher education, especially in premium institutions or studying abroad
• Returns depend on market performance but offer higher growth potential

Best for: Parents who can afford to take a risk and grow wealth over a longer term for specific goals like getting their child into a premier institution.

Sounds promising? Check out Bandhan Life iInvest Advantage, a ULIP with no hidden charges.

3. Endowment Plans

• A mix of insurance + savings
• You get a lump sum at maturity if you survive the policy term
• Good for meeting child’s education or marriage expenses

Best for: Those who want safe, disciplined savings along with protection.

4. Child Insurance Plans

• Designed to secure a child’s future in the absence of a parent
• Offers regular payouts at key milestones like school, college, etc.
• Many plans come with premium waiver benefits, so the policy continues even if the parent is no longer around

Best for: Parents focused on structured financial planning for their child’s milestones.

Choosing the right mix of plans can give you both security and growth, especially if you have multiple financial goals for your children.

5. Guaranteed Income Plans

• Guaranteed Income Plans offer fixed, regular payouts after a certain period, along with a life cover
• These plans are great for creating an additional income stream to meet monthly household expenses, children’s school fees, or support aging parents
• They also come with a maturity benefit and a death benefit, ensuring your family is financially protected
• Payouts can be structured monthly, quarterly, or annually—offering flexibility based on your needs.

Best for: Parents who want a steady secondary income alongside insurance protection, especially as they approach retirement or need support during children’s growing years.

This plan acts as a safety net plus income booster—helping you manage responsibilities today, while preparing for tomorrow.

6. Whole Life Insurance

• Offers lifelong coverage (usually up to 99 or 100 years)
• Can come with a savings or investment component
• Premiums are higher but it ensures long-term security

Best for: Parents planning long-term financial legacy for children or those wanting to leave behind a financial safety net.

How Much Life Insurance Coverage Do Parents Need?

There’s no one-size-fits-all when it comes to coverage, but here are a few things to consider:

• Your current annual income: A common rule of thumb is to get coverage of at least 10–15 times your annual income.
• Existing liabilities: Home loans, car loans, or education loans should be factored in
• Children’s needs: Future school and college expenses, extracurricular activities, and even weddings
• Living expenses: Monthly household needs, healthcare, rent, and inflation

For example, if your annual income is ₹10 lakh, and you have loans worth ₹30 lakh, you may need at least ₹1.2–₹1.5 crore of coverage.

A life insurance advisor can help you calculate this based on your family’s current and future financial picture.

Benefits of Buying Life Insurance Early as a Parent

Starting early when it comes to buying life insurance brings many advantages, especially for parents:

• Lower premiums: The earlier you start, the lower your monthly/annual premiums will be
• Wider policy options: Younger buyers are eligible for more plans with flexible features
• Long-term financial protection: You stay covered for a longer period, often through key life stages
• Better financial planning: Helps create a habit of structured saving and protection

Let’s say you buy Bandhan Life’s iTerm Prime at 25. You may pay about ₹11,903 annually for ₹1 crore cover. Wait till 35, and the same cover might cost over ₹18,576 per year. That’s the value of starting early.

Things to Consider Before Buying Life Insurance for Parents

Buying life insurance is a long-term decision. Here’s a quick checklist for parents:

• Choose the right insurer: Look for a company with a high claim settlement ratio (Psst: Bandhan Life has a claim settlement ratio of 99.66%)
• Pick the correct term: Choose a term that covers you till your children become financially independent
• Calculate the right sum assured: Don’t underinsure—factor in inflation and long-term expenses
• Check premium affordability: Make sure you can comfortably pay premiums long-term
• Add riders if needed: Riders like critical illness, accidental death, or waiver of premium can enhance protection
• Buy online for better transparency and lower cost: You can compare and apply through trusted platforms

Buying a policy shouldn’t be rushed. Take the time to assess what fits your life best—because your family deserves that care.

Frequently Asked Questions

1. At what age should parents buy life insurance?

It’s ideal to buy life insurance as early as possible, especially when your kids are young. Starting early means lower premiums and wider coverage options. Even parents in their 40s and 50s can get suitable policies, though rates may be higher.

2. Can stay-at-home parents get life insurance?

Yes. Even if you're not earning an income, your contribution to the household is significant. Some insurers offer policies for stay-at-home parents, recognising their role in the family’s financial stability.

3. Is life insurance expensive for parents?

Not necessarily. Term insurance plans are quite affordable, especially if purchased early. Premiums depend on age, health, coverage amount, and policy duration. Online policies often offer better rates and flexible options.