My spouse and I are professionals working in reputed companies. We have two children, 15 and 18. For their future, and also our post-retirement days, we have invested in a sufficient number of bonds, fixed deposits and real estate. Do we still need to invest in life insurance policies?

The decision to buy life insurance depends on your responsibilities and financial needs for the future. Since your children are still economically dependent on you, it is essential to provide them a cover that will give them financial security in case of any eventuality to you. Moreover, you can use life insurance as collateral for loans, to finance children’s education, for retirement income, etc.

Life insurance policies are comparable to other savings instruments available in the market. A key advantage of insurance products is that there is a tax rebate on premiums paid for certain income groups up to a prescribed amount. And, the policy proceeds are tax-free, thus providing a high net yield. A judicious mix of different savings instruments is imperative for proper financial planning.

In case I decide to invest in a child policy, how would it be different from investing in a regular term insurance plan?

A term insurance policy purely offers protection. A child policy has a specific objective of ensuring that by the time?your?child?attains?a?certain age, he/she has a lump sum for higher studies or starting a business. That apart, it also provides financial security to the child in case anything unfortunate happens to you.

Readers are welcome to write in with their queries to The questions will be answered by senior executives from leading insurance firms.

This week’s expert is T.R. Ramachandran, managing director and CEO, Aviva India.