Women have increasingly become dominant players in the Indian workforce. These days, an increasing number of women are either co-bread winners or even sole bread winners for the family. However, when compared to other financial instruments such as fixed deposit and mutual funds, many don’t consider having a life insurance policy to protect their dependents or partner.
It is not uncommon even for financially independent women to pass the baton to their spouse when it comes to buying a life insurance policy. However, there are multiple benefits of buying a policy for your long term financial stability.
Ensuring financial stability for the family as the sole breadwinner
In case of any eventuality, as a sole breadwinner you would always want to be assured that your family continues to be financially stable. If you have a mortgage or loan in your name, term insurance is the first thing you should sign up for to secure your assets.
Even in a dual-income family, the loss of either parent would have serious implications on the family’s finances. Apart from owning the financial burden completely, it may warrant the surviving parent to give up their job in order to take care of the children. So, while the employer may be providing a life insurance cover, it is usually not enough to provide a long term financial sustenance for the family.
The amount of life insurance you need depends mainly on your lifestyle and financial liabilities. Interestingly, term insurance plans are available to working women at a lower rate of premium as compared to their male counterparts.
One can opt for a lump sum benefit or a monthly income payout. A preferred option is to opt for a combination of lump sum amount plus income stream, which will ensure that your family’s lifestyle is not compromised.
Here, a Rs 50 lakh cover for a 30-year-old non-smoker female with coverage till the age of 75, will cost as low as Rs 5,000 a year or Rs 14 per day.
Providing for long term financial goals
As your income increases, your financial responsibilities also increase proportionately. Therefore, it is important to undertake a financial planning exercise every year, where you review your short, medium and long term goals and make investment decisions accordingly.
The benefits of starting early in your career are huge as small investments every month can grow into a large sum if invested wisely. Unit Linked Insurance Plans (Ulips) offered by life insurance companies have the potential of providing long term, stable returns with an added benefit of a life cover in a simple and affordable manner.
These plans provide for your long term goals and you may start with a premium as low as Rs 2,000 per month. These products offer multiple fund options to choose from, and can be brought online as well.
Safeguarding against rising health predicaments
As per the latest global figures released by the World Health Organization (WHO), around half a million women die from cervical cancer and half a million more from breast cancer each year. Treatment for such illnesses is not only lengthy and traumatic, but also expensive and involves a lot of lifestyle modifications for a woman.
Our research confirms that most people dip into their life-time savings to cover treatment costs and care. Hence, an insurance cover that offers benefits of a comprehensive health insurance and a critical illness cover becomes imperative. Life and health insurance firms in India offer a range of affordable health products and riders that include medical expenditure and other incidental costs in case of diagnosis of a critical illness or any surgical procedures.
Securing a comfortable retirement
Through traditional saving plans or by investing in income protection’ plans, you can save systematically to ensure a financially independent retirement life. Investing early in the right life insurance policy will help you create a retirement corpus which can then be used to purchase annuity or regular income from the insurer upon retirement.
Being tax smart
Life insurance plans are long term in nature and therefore enjoy EEE (Exempt Exempt Exempt) benefit. This means that the amount you invest, the amount that your investment earns and the amount that you finally receive is all exempted from income tax.
Ensuring encumbrance free estate through MWP
The Married Woman Property (MWP) Act protects the woman’s right to the death claim proceeds of her husband along with children. Such claim or maturity proceeds cannot be detached from the estate of the deceased nor can it be accessed by the creditors.
Under this Act, those who have owed money to the policyholder in the past cannot make a claim. Through this, the welfare of the wife and children will be protected. This is particularly relevant in case of joint families where there can be instances of multiple claimants from the family.
Lastly, when you decide to buy a life insurance policy, do your research and understand the benefits clearly. It would be wise to prepare a list of questions to ask your agent, bank or sales person before signing up for one.The writer is CMO & EVP, Strategy and Retail Assurance, Future Generali India Life Insurance