5 Things to Know About Financial Planning for Elderly Parents

8-June-2021 |

Financial planning for elderly parents is a moral responsibility. We have to take definite steps to ensure they are financially secure once they have retired after fulfilling their financial obligations like children education, marriage etc. Old age is riddled with medical emergencies, erosion of retirement funds quicker than anticipated and other financial discrepancies like children fighting for their share of assets. Hence, a designated savings plan can help your elderly parents have a stress-free and comfortable life.

Here are a few things to know about financial planning for elderly parents:



1. Health Cover


The primary and most important expense incurred out of an elderly parent is related to medical complications. Pre-existing ailments can increase and require timely health check-ups. Due to decreasing immunity, critical illness can crop up and surge the probability of medical emergencies.

Purchasing a health insurance policy well in advance will be a good resolution. It is always better to purchase a separate health insurance plan rather than a family insurance plan for the parents. This is primarily because the premium will be based on the health condition and the medical history of the elderly person in the family insurance policy, and the cost is higher. A separate health cover in financial planning will be cost-effective and satisfy the needs when required.

2. Managing Debt


It is important to have an open discussion with aged parents regarding their financial liabilities. Include all the loan obligations, and the extent of repayment satisfied and find the total. Subtract it from the retirement fund and derive the balance amount required. Help them by investing in a guaranteed# savings plan. Since the returns are guaranteed# according to this plan, you can opt for the right combination of premium and policy tenure as per their requirements. The pay-outs can be in the form of a lump sum with guaranteed# returns, a combination of lump sum and regular income or a monthly income plan. Analyse the preferred method for repayment and choose the appropriate savings plan.

3. Life insurance plus saving


If there is a family dependent on the aging parent, then two important concerns arise. 

  • Managing regular expenses for the family post-retirement.

  • Managing finances in the event of the sudden demise of the only earning parent.

Financial planning for elderly parents is an emotional task; however, it is extremely vital to consider practical life scenarios.

savings insurance policy will be an ideal option in this scenario. According to this policy, one has to pay monthly premiums for a set policy period. This contributes to the following two benefits:

  • Life cover with a sum assured for the nominee in case of the policyholder’s unexpected death. The sum assured can be enhanced with additional riders1 like accidental death benefit rider1, critical illness rider1, terminal illness rider1, total and permanent disability rider1 etc. These riders1 make the sum assured payable earlier than as death with respect to the policy conditions.

  • Guaranteed# income after the policy matures. The guaranteed# monthly income will be provided for the next ten to twenty years as per the policy terms and conditions. It will be a certain percentage of the total premiums paid per annum. The premium can be paid monthly, quarterly, half-yearly or annually.

Also, the premiums paid and the guaranteed# returns qualify for a tax* deduction and tax* exemption under Section 80C and Section 10(10D) of the Income Tax Act, 1961. Tata AIA Life insurance offers a well-proficient monthly income plan for all the basic needs for post-retirement life. 


4. Low-Risk Investment Opportunities


Retirement financial planning can include a wide range of investment options. If there are no debt commitments, the retirement fund received as a lump sum can be invested in annuity plans provided by the life insurance companies. The income is based on an existing rate of return. The individual can also invest in low-risk savings schemes such as Senior Citizen Savings Scheme. It will provide a return in the form of regular income. Investment in equities and other similar funds can pose a huge risk and might lead to loss of assets if not planned or monitored well. Hence, it is always better to invest in moderate or low-risk investment instruments.

5. Estate Planning


Estate planning will give clarity on the possession of assets when the elderly parent gets incapacitated or dies. This is an important financial planning step because it avoids unnecessary misunderstandings and hassles among children. It will save a lot of time and money. The parent can decide on how the property, liquid cash and other assets will be distributed. One can always seek expert guidance in this regard for any legal compliances.



Having discussed the importance of financial planning for elderly parents, it is important that we incorporate the above-mentioned points to let them stay healthier and wealthier. The sooner the planning is done, the better is their post-retirement life. There is a broad range of savings plans from various financial institutions. Based on the level of understanding of family expenses, the extent of medical liabilities and other debts, we can opt for the right option.

Even after following such practices, if the fund does not satisfy the needs or the monthly income, we can always resort to changes in the lifestyle, and make corresponding financial plans. Make the right choice to satisfy all the financial obligations and ensure that parents get a guaranteed# monthly income to survive and stay peaceful! 


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  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you
  • #Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry

  • 1Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.