Being a family person can teach us many things, but most importantly, it makes us realise how giving and selfless our parents had been when we were young. With youth no longer with them and their means of income now scarce, all your parents’ need is your time and their money. Moreover, since your parents aren’t working anymore, it is quite difficult for them to obtain investment options that can help them combat inflation and maximise the returns of their retirement benefit. Therefore, it is time for you to step in and ease their concern through some prominent yet distinctive financial gifts that can help them reduce their financial liability, offer significant returns and offer capital safety.
One of the most suitable financial gifts that you can give your parents is a health cover plan, which would help them address any age-related concerns. While you wouldn’t want them to fall sick, it always pays off to be prepared for any contingency. That said, health insurance at your parent’s age of depleting funds could be an expensive financial burden on them. Therefore, you need to see that your parents don’t have to look for financial help elsewhere for their health.
You can go for a family health cover, which would help cover yourself, your spouse and child along with your parents. This way you would also be able to save tax up to a maximum of Rs. 75,000 (Rs. 25,000 for health insurance for self + Rs. 50,000 for your parents health policy) under Section 80D, along with an additional Rs. 5,000 regarding healthcare checkups during a year.
Senior Citizen Savings Scheme (SCSS)
Senior citizens are usually victims of depreciating bank interest rates. Therefore, instead of debt investments such as fixed or recurring deposits, it would be advisable to gift your parents an SCSS or Senior Citizen Savings Plan. Operated by the Government of India through post offices, this investment scheme offers an opportunity to avail higher returns than any other investment tools including FDs. Under this scheme, any residents 60 years and above are eligible to receive a fixed interest rate of 8.7 percent for a 5-year period on their investments. Moreover, the interests are paid out monthly, while the scheme qualifies for the tax benefits under Section 80C.
Pradhan Mantri Vaya Vandana Yojna (PMVVY)
The Government of India announced the increase the financial benefits under the Pradhan Mantri Vaya Vandana Yojana in the Union Budget of 2018-19. While the maximum limit under the scheme has been increased up to 15 lakhs per senior citizen, the government has also extended the period of sale for the policy up to Rs. 31 March. Moreover, LIC has been given the sole responsibility to manage the sale of the plan.
The PMVVY offers some benefits in the form of Pension Payment (under this plan, a pensioner receives a pension in arrears after the end of each period, during the 10-year policy term. In case a pensioner dies during the policy term, the beneficiary would receive the purchase price of the policy. On the other hand, the maturity benefit of the scheme comprises the purchase price along with the last pension instalment.
Unit Linked Insurance Plans or ULIPs are traditionally considered as an insurance plan; however, these are also capable of providing investment benefits on the invested premium. It implies that ULIPs can help ensure your parents have the much-needed life cover plus a chance to maximise their retirement corpus through money market instruments. ULIPs from reputable insurers including Max Life Insurance offers a variety of benefits such as comprehensive life insurance coverage, flexibility to choose the premium payment term and policy term, choice of multiple funds for investors with varying risk appetites and option to make partial withdrawals. Moreover, ULIPs such as Fast track super plan also provide mechanisms such as Dynamic Fund Allocation and Systematic Fund Transfer to protect the investors’ capital against market volatility.
As a parent, we are always looking out for any possible contingencies that might harm our child’s dreams. We make sure that they live their lives to the fullest, make the best use of every opportunity and never feel disheartened because of any financial inadequacies. The same set of responsibilities hold for your parents as well. Now that they are frail and out of options earn, they need your help more than ever to live their lives on their terms. Therefore, it becomes your responsibility to make sure that your parents are self-sufficient, despite their age and depleting income. You need to step up as their child and help your parents become independent once again.