Moolah & Aloo: A Series on Financial Literacy

Moolah & Aloo: A Series on Financial Literacy
Kevi: How did Temsu and his family suddenly manage to buy a house after their dad passed away? They were all living in a small, rented place, and now, out of nowhere, they’ve got their own home.
Abemo: Yes, they also bought a car to ferry around their elderly grandparents.
Aken: I heard that Temsu’s college admission fees have been fully paid, and they don’t have to worry about his sibling’s school fees either.
What do you think happened here?
Temsu’s father planned for his family while he was alive by buying a life insurance policy, and that’s exactly what happened here.
So, what exactly is a life insurance policy? In simple, everyday terms, a life insurance policy is like a safety net for your family. You pay a small amount of money regularly (called a premium) to an insurance company. If something happens to you, the company promises to give money to the people you care about, like your spouse or kids. This money can help them pay bills, cover college fees, funeral costs, mortgage payments, and other liabilities when you are no longer around. It gives you peace of mind knowing your family will be taken care of financially if you pass away.
There are two types of life insurance. Let’s understand these two and also find out which one Temsu’s dad bought.
Whole Life Insurance: Whole life insurance covers you for your entire life as long as you keep paying the premiums. It guarantees a payout to beneficiaries when the insured person dies, no matter when that happens. It also includes a savings element that builds cash value over time, which you can borrow against or withdraw. Because of this lifetime coverage and cash value component, whole life insurance usually costs more than term life.
Term Life Insurance: Term life insurance gives coverage for a specific number of years (like 10, 20, or 30 years). If the insured person passes away during that time, the insurance pays money to their family or beneficiaries. If the term ends and the person is still alive, there is no payout. It’s usually more affordable and is good for people who want coverage only for certain periods, such as while their children are growing up or while paying off a mortgage.
If you want coverage for your whole life and still wish to have some cash value that you can withdraw in the future, then the whole life plan is the one to consider. However, if you wish to be covered until a certain age like 50, 60, 70, or even up to 80, then you can consider getting a term policy. There is no cash value for a term policy, so the premium is very affordable.
Kevi, Abemo, and Aken bumped into Temsu in college.
Kevi: I’m sorry for your loss, Temsu.
Temsu: Thank you for your concern and for visiting me during my dad’s wake service.
Abemo: Temsu, sorry to be very direct, but how did you all buy a house, a car, pay for your college fees, and even donate to the church building project? Did you win a big lottery?
Temsu: Oh no! It was dad who did all this for us.
Aken: How is that possible? If I may say, he was just a junior manager in a small company.
Temsu: Yes, that’s true. He didn’t earn a lot, but unknown to us, he set aside some money to pay premiums for a term insurance policy. As soon as he passed away, we received a death benefit from the insurance company that is enough to pay for our daily expenses. He even named each one of us as beneficiaries, showing how much my mum would receive and how much me and my siblings would receive.
Once I start working, I’m also going to buy the same for my family.
Kevin, Abemo, and Aken in unison: What an amazing dad you had. We will go home and discuss the benefits of life insurance with our parents.
Until then, if you’re a parent or a working professional supporting your family, be like Temsu’s dad!
Side note: According to www.acko.com, the premium for a term insurance policy for a non-smoker male for Rs. 1 crore coverage until age 65 is Rs. 1,400/month. If you want to check the premium for your own age, please visit Acko or similar websites to check the premium according to your age. Buying life insurance at a young and healthy age can help you secure much lower premiums.
Disclaimer: This guide is provided solely for educational purposes to raise financial awareness and help you make informed decisions. It is not investment advice, nor is it a solicitation or endorsement of any financial products or services. Always consult with certified financial advisors and invest only through well-established and regulated companies to ensure the safety and suitability of your investments. All the names and characters mentioned are fictional and created for illustrative purposes.