Every young adult may not get a sound financial footing as they step out to earn their own living. The competition in the job market makes it difficult for the youngsters to establish themselves in a short span of time. The recession has its effect on the job opportunities and the earnings of each working adult as well. Thereby, many adult children seek monetary assistance from their parents when they lose control over their finances.
If you’re a parent yourself, you would definitely want to see your children living off comfortably. However, it’s not rational to give away all your accumulated funds for your children, and then become dependent on them. Instead, you can approach in the safest way possible, with insurance as your tool. Read along to know the possible ways in which insurance can help you.
How insurance can be arranged to financially secure your children?
Insurance can be a great help if you want to help your children financially. Check out the following ways: 1. Leave the proceeds from your life insurance as a legacy – You can buy a life insurance policy for yourself or for your spouse, and then name your child/children as beneficiary. After the death of the insured individual, the named beneficiaries will receive the death benefits from the policy. The amount received will serve as a legacy or inheritance for your child. Moreover, the proceeds from the policy will be tax free. 2. Use up the cash value from existing policy – If the financial requirements are immediate, then you can even loan against the existing cash value of your life insurance policy. The amount can be used to provide financial help to your child. However, if the loan is not repaid, the death benefits from the policy would be considerably reduced. Again, it’s not sensible to tap into the cash value of a policy to help your child, if you lack firm financial footing yourself. You may need the cash later on to meet your own financial requirements. 3. Use life insurance as an investment option for your child – Financial advisors point out that buying a life insurance policy for a child is an unnecessary expense. Firstly, since children are usually not the earning members of a family and secondly, they have huge life expectancy. However, for the same reasons, life insurance coverage is cheap for the youngsters, and can be used as an investment option by the parents to secure the future of the insured child. If a life insurance policy is bought at an early age, the cash value of the policy will turn out to be a lump sum amount by the time he or she grows up and the policy matures. The cash value can be used to meet various financial requirements of your child in the future. 4. Include them as residual drivers under your auto insurance policy – Teenagers and young adults are considered as irresponsible drivers by the auto insurers. Individual auto insurance policies for them can burn a hole into your pockets. If you and your child live in same residence, you can extend your auto insurance coverage for him as well. 5. Include them under your health insurance – The Affordable Care Act has opened up gates for the young adults. If a young adult can’t afford an individual health care plan, they don’t need to stay uninsured. The new provision allows them to stay covered under their parent’s health insurance policy till the age of 26 years, irrespective of their marital status, place of residence or income. This will reduce the cost of health care to a great extent. You can also buy Long term care insurance for your old age protection so that your children won’t need to bear the expenses of your long term care. Final expense insurance can be bought to cover for the funeral expenses of the insured. This way you can arrange to meet your own financial requirements and not be a burden on your children at old age. Instead, you’ll be able to look after the wellbeing of your children and lend assistance wherever and whenever necessary.Blog Category