The transition from husband to father is the most significant life stage change for any man. From the moment, the new born arrives into the world, the spending begins. And as the kid grows up, expenses too rise. A sense of responsibility sinks in and parents begin to contemplate a savings mechanism for the child’s long-term needs such as education or marriage.

Financial goals and life cover
As a parent, there would be goals to be met and each of them requires money. The financial planning process for an individual begins by identifying the various goals at different stages of life. Even before you start to save for the child needs as a parent, first consider taking a life insurance cover.
Such a protection helps the surviving family members to maintain their standard of living in the event of death of the main earning member. Life insurance, therefore, acts as an income replacement tool. In addition, a life cover provides financial support to meet the various financial goals, as desired by the parent, at different life stages of the individual, in case of any mishappenings.

Risk in self-funding goals
Some of the common avenues that a parent invests in for accumulating wealth include public provident fund (PPF), mutual funds, shares,gold and real estate. All these are self-funded in nature. So, one needs to be alive and keep investing in them to keep the corpus growing till the time it is put to use.
But, life might throw up nasty surprises. The risk of dying early exists which could derail the entire investment process. In addition to the mental trauma, the surviving members of the family, , could also suffer from loss of income thereby making long term goals vulnerable to vagaries of circumstance. In case the parent dies an untimely death, the child’s dream of higher studies or a plan for a decent marriage of the child may get jeopardised.

Managing goals with term insurance
The role of a pure term insurance plan becomes an important in tackling such a situation. . A pure term insurance plan ensures that even if the parent is not around, the child’s goals are not compromised and are met on time. A pure term insurance policy is suitable for meeting this kind of risk arising out of an untimely death.

Term plans to the rescue
Term insurance plans offer guaranteed protection in terms of sum assured for a fixed premium for a fixed period of time. In case the policyholder dies during the term, the sum assured gets paid to the family. On surviving the term, one doesn’t get anything back as there is no ‘saving’ portion of the premium. In this sense, premium paid for term insurance is similar to the premium paid for car insurance, assuming there is no claim on it.
The most cost-effective way of buying life insurance is therefore through a pure term insurance plan. These are low-premium, high-cover protection plans where the premium is used entirely, except for a small portion used to meet administrative costs, for risk coverage, i.e. to cover the mortality risk.

How much is enough
Based on the human life value of an individual, the parent needs to have adequate life coverage in addition to the goal-based life cover to help the family maintain the same standard of living in his absence. As a thumb rule, one should have life cover of at least ten times one’s annual income , plus all the liabilities like home loan, personal loan etc and then add the coverage amount required as per the long term goals.
A parent can either buy a term plan for a consolidated amount or split the requirement and buy more than one term plan to meet each goal separately. Once a goal is met, the corresponding term plan can be dropped with no further premium outflow.

Conclusion
The best time to buy a term plan is when one has financial dependents. For unmarried professionals, there could still be parents around who are financially dependents. This means taking term plans early on and then as life moves on, one should keep topping up with additional coverage which could be on marriage and on birth of kids. Finally, do not merely go by the premium amount while choosing the plan. Select the insurer based on their reputation, market share, claim settlement ratio and coverage needed among other important things and pick a policy that suits your requirements.