Insurance Query: Is buying a life insurance plan important for students going abroad to pursue higher studies?

My daughter will be going abroad for higher studies. I never heard this, but should I buy a life insurance plan for my daughter? Why is it crucial?

Chhanda Banerjee Das
New Delhi

Reply by Sharad Bajaj, COO, InsuranceDekho

As a young college student going abroad for higher studies, purchasing a life insurance policy may not be a top priority. However, in the midst of your academic pursuits, considering adequate protection against unforeseen circumstances is advisable. While traditionally viewed as a mundane task, the landscape of insurance has evolved significantly. Life insurance policies now offer not only financial security but also opportunities for wealth accumulation. Products such as Unit Linked Insurance Plans (ULIP) and money-back policies present avenues for long-term wealth creation and financial stability.

"As Indian students embark on their transformative journeys abroad, securing a life insurance policy is not just a financial decision but a crucial step toward safeguarding their future. Life insurance provides invaluable support in covering outstanding student loans, ensuring that family members are not burdened by financial obligations. It offers essential protection for dependents, alleviating concerns about their well-being in times of uncertainty. There are many students who rely on education loans for funding their education abroad so with life insurance, in case of any unexpected loss, the debt of these loans are not transferred to the family. This provides peace of mind, allowing students to focus on their studies while knowing that medical expenses and unforeseen circumstances are taken care of. With the added advantage of currency stability and lower premiums, life insurance is a vital tool for financial planning and long-term security for students studying overseas," said Sharad Bajaj, COO, InsuranceDekho.

Why a life insurance policy is crucial

1. Debt protection is one of the primary reasons individuals opt for life insurance. It plays a crucial role in safeguarding individuals who have taken loans, especially students financing their education. In the unfortunate event of the insured being unable to repay the loan due to unforeseen circumstances, life insurance steps in to settle the outstanding debt. This provides peace of mind knowing that loved ones won't bear the financial burden in such situations.

2. When it comes to life insurance, purchasing a policy at a young age offers the significant advantage of locking in lower premiums. As individuals grow older or encounter health issues, the cost of life insurance can rise substantially. By securing life insurance early on, individuals can ensure they benefit from a very affordable rate, ultimately saving money in the long run.

3. Life insurance guarantees a secure future for the insured individual. Often, individuals aged 18-21 may not prioritize long-term financial planning. However, life insurance serves as a protective measure, offering financial security in the present while also paving the way for a stable future. Additionally, it grants access to coverage in case of any health complications that may arise later in life, ensuring continued protection and financial stability.

4. Whole life insurance is a form of permanent insurance that accumulates cash value over time. While it typically comes with higher premiums compared to term insurance, the accrued cash value can serve various financial purposes in the future.

5. One significant benefit of life insurance is its ability to cover post-death expenses such as funerals and burials, which can otherwise place a financial strain on grieving family members. By having life insurance in place, individuals can alleviate this burden and enjoy a more stress-free existence.

6. Furthermore, investing in life insurance can offer peace of mind by providing a sense of security and financial stability. Research suggests that happier individuals tend to live longer, emphasising the importance of reducing stress and worry. Life's uncertainties and unforeseen tragedies can strike at any age, underscoring the value of early protection to ensure a more relaxed and secure life.