Insurance products have emerged as the preferred choice for investment options for parents as they believe they are safe and secure financial tools to achieve and meet their goals in the future, according to a study.
insurance products have emerged as the most popular choice for saving and investing for the parents following the outbreak, since they view them as secure and low-risk tools for achieving future goals, as per an investigation.
The survey #FutureFearless done by Ageas Federal Life Insurance and YouGov India to understand the effects of the COVID-19 virus on the financial literacy of Indian parents who plan for their children’s educational needs revealed that saving money for education is more important than other priorities in life.
The study was based on an online self-administered method of quantitative analysis that was conducted within 11 different cities.
The data was gathered from 1,333 parents of children younger than 10 years.
The growing cost of education through the primary school years to graduation, and the desire of parents to provide their children the best education possible have given priority to savings to fund education over other goals in life like marriage or a career as the survey found.
The majority of parents have made investments in the life insurance solutions like Unit Linked Insurance Plans (ULIPs) as well as money-back plans and endowment plans to help them meet their children’s academic ambitions, it stated.
While the majority of polled parents stated that they’d rather save money for their college or higher education for their child more than 40 percent advised saving for their child’s education also. A large majority of parents created a separate plan to fund their child’s education.
As the disease continues to linger, it has cast a shadow on employment security, business growth as well as mental and physical health, and education, a lot of people had to cut back on their savings as well as invest during the time of the pandemic. This also forced them to look at their financial planning.
“Saving for their children’s future as well as milestones came out as the most important thing for parents, with 64 percent, along with the saving of medical emergencies at 65 percent. The next priority was an accumulation of wealth over the course of time for families at 54 percent and creating a contingency or corpus fund to cover rainy days at 41 percent,” AFLI said in the survey.
According to the survey, parents view life insurance as an investment tool with low risk as well as a safe financial instrument to protect the family from any future risks.
A majority of 60% of parents have said that they began investing in their children when they were between 0 and 3 years old. A third of them believe they are investing enough. But, one in three parents is not sure about the sufficiency of their savings and the need for better knowledge and preparation for financial matters.
Life insurance with a cash-back option appears to be the most sought-after option for parents and is available across non-metros and metros.
Many families have faced the stress of losing jobs or salary reductions, the unpredictability of business earnings and other financial strains parents are choosing traditional career paths such as engineer, doctor scientist, teaching and chartered accountant or pilot, sportsperson, and defense as the best options for careers.
However, the increased exposure to digital media and online courses in education has opened the eyes of students to new fields and professions like virtual reality designer and YouTuber, gamer drone pilot, and social media influencer among others.
The COVID-19 epidemic has caused Indian parents to reconsider their health financial and priorities and to work towards establishing an enduring future for their families by making smart investments and savings, Karthik Raman, Chief Marketing Officer and Head of products, Ageas Federal Life Insurance stated on the survey results.
What is an example of an insurance product?
A service contract or insurance product is one in which an insurer or service contract provider promises to pay or indemnify another as to loss caused by certain specified contingencies or perils. A reinsurance agreement, a reinsurance treaty, a reinsurance pool, insurance products for property and casualty, health and accident insurance, life insurance, surety bonds, specialty risk insurance, warranty programs, or to pay or grant a specified amount or a determinable benefit in response to ascertainable risk contingencies. All insurance or reinsurance products that involve accepting risks or paying or indemnifying another for specific losses.