The Cost of Raising Child AKA Why You Need Life Insurance

Experiencing fatherhood has always been awesome, but it brings responsibilities as well. There is a huge cost involved in raising a child to 21 years of age. According to a study conducted by ET Wealth, it will cost around Rs 54.75 Lacs to raise a child.

Here is the breakdown of the cost associated with having a child

Housing

Before you have a baby, you and your partner feel comfortable in a one-bedroom flat. After having a baby, you feel a need to move into a bigger, more spacious apartment. Housing accounts for one of the major expenses that increase after having a child. If belief on estimates, it accounts for 19% of spending for raising the child.

The only thing that is constant in our life is “change”, with the time we all know the need for family and we do work according to that. It shows the changes, before getting married or having kids, a common man first wants his own home. A home with memories of his kids, a home that provides a better facility to their children for grooming. Only a house is a witness of every memory, memories of your happiness, memories of sadness, memories of struggle, and the memory of your child’s first cry.

Education

A major portion of your total spending goes into the education of your child. Parents always like to give their children the best-in-class quality education. Most of the children are studying in private schools, the most of them charge high fees. Moreover, the cost of education keeps on increasing every year and that’s why a family has to spend 46% of total spending on education for raising a child.

Education is a basic need, and being a parent it’s your duty that your children should be provided better education and in a better school. Nowadays, two things are way expensive for a common man, the first is a medical requirement and the second is education. Education becomes expensive with time, the reason is there is no facility available in a government school and it’s a bitter truth that we keep ignoring for years. Providing the best school, and best education is a bit expensive nowadays, and it takes a lot of effort for parents.

Getting knowledge from private institutions is expensive now, and after all this, a parent never compromises with children’s education. There are a lot of schools in every city across the country, and every school doing business in the name of knowledge, just because knowledge is a new era business.

Entertainment

Fun and entertainment is the life of kids. Considering the cost involved in the entertainment of your child such as toys, movie outings, internet, family vacations, etc. account for huge spending. Entertainment for kids accounts for 12% of total spending for raising a child.

There are several other expenses that incur towards raising your child. A total of 23% is spent on expenses such as clothing (6%), transportation (5%), food (5%), healthcare (4%), and other miscellaneous expenses (3%).

Don’t forget to mention the inflation factor that leads to an increase in the cost of the upbringing of your child. There were times when kids were satisfied watching Doordarshan. But now, the modern-day kid demands more and you have to make arrangements for expensive sources of entertainment such as kids’ channels, high-tech toys, games, etc. that increase the spend to raise your child.

Considering all these factors in mind, the cost of raising a child is astounding and parents make all efforts to ensure their children will fulfill their desires and aspirations.

But, if something unfortunate happens to you, your family may not be able to meet the cost of raising the child. Here, life insurance plays a pivotal role. With a life Insurance policy, your nominee/beneficiary will receive the sum assured amount as a lump sum in the event of your unfortunate demise. So, having an appropriate life cover ensures you peace of mind.

Suppose, at 30 years of age, you buy a Max Life online term plan plus a life cover of Rs 1 crore for 25 years of the policy term. The insurer will charge you an annualized premium of Rs 6400.

It is a small price you need to pay that covers financial expenses for the upbringing of your child, even when you are not around. With this life cover, your spouse can easily cover the cost of raising a child i.e., Rs 54.75 Lacs, and the remaining amount of Rs 45.25 Lacs can be used to fulfill other recurring expenses of your family, such as paying off loans, child’s marriage expenses, etc. It thus ensures a complete cover for your family.

Conclusion

No doubt, the cost involved in raising the child is extremely mammoth and you need to make robust financial planning, so your child’s future is not at all compromised. It becomes vital to buy a life insurance policy with appropriate coverage that can help your family to easily cover the cost of raising the child.