International Women’s Day 2018: Why women need to invest in life insurance
March 8, 2018 by Anjla Dhir
With the entire world observing ‘International Women’s Day’ today, it’s time that we focus our attention towards the greater needs of women that includes securing their lives and income. With women being the focal point in the eyes of all, the most pertinent question remains, “Do women value their own security and lives as their male counterparts?” Statistics by various insurance companies clearly indicate how men are more proactive when it comes to paying for life insurance plans, which indicates the necessity to inspire women about the need to secure their lives. The need to educate women about available insurance policies and the protection cover they ensure against uncertainties like death, disease and disability is the need of the hour.
Today’s society has empowered women like never before. Jobs and opportunities are available to women of all sections that allow them not only to prove their mettle, but also participate in lightening the burden of financial responsibility that had largely been the prerogative of men. While women are increasingly finding themselves in positions of responsibility and power, not many women have shown much concern about their lives and hence do not invest in protection covers offered by insurance companies. The quantum of risks despite being more or less the same for both men and women, few women have ensured themselves the necessary protection against formidable risks arising from unwarranted situations like sudden death of spouse, lack of adequate savings, critical illnesses or health problems.
Buying insurance to secure future
While thinking of ways to make necessary financial planning, it is necessary that working women allocate a certain amount of their money to buy insurance policies. The death benefits that various plans assure allow the insured to be in a better position to face unforeseen circumstances.
The following are the kinds of insurance plans that women must consider investing in:
1. Buying Life Insurance Plans: Not many realize the immense value that women add to their family’s lives on a daily basis. Like men, they not only contribute towards managing the family expenses, but also create lump sum savings they can leave behind as a legacy for their loved ones. Any kind of untoward incident resulting in the woman’s death, hence, not only results in imbalance, but also wrecks the sense of financial security existing till date. Apart, there are instances where a woman may be the sole bread earner of the family and may have to set aside savings for children’s education while also planning enough for retirement. Having an insurance policy not only helps them attain their financial goals, but also takes care of their families in their absence.
Women may consider investing in term plans or paying for whole-life term policies.
# Buying a term plan: Identified as the purest form of life insurance, the life of the woman is insured by paying a certain amount of premium for a fixed period. In case of untimely death of the policyholder, the nominee receives the amount that, in turn, makes up for the financial loss incurred. Women seeking to create a sense of financial security for their loved ones must consider buying a term plan as a core component of the investments they make. Having a term plan assures a sense of financial cover against any unforeseen uncertainty.
# Investing in a whole-life term policy: Paying for whole-life term insurance means endless coverage for loved ones. Whole-life term policies are designed in a manner to cover the insured for the rest of their lives subject to the condition that premiums are paid regularly. Women who feel that their liabilities will be carried forward even after retirement or want to create a guaranteed payout for dependents, should look a for whole life term policy. In addition, the policy cover does not expire after the culmination of a certain period, nor is cancelled due to certain adverse health conditions or major illnesses.
2. ULIPs make long-term savings possible: Buying life insurance policies like unit-linked insurance plans (ULIPs) either involves making a lump sum amount towards the policy or paying for premium at regular intervals. The five year lock-in period in ULIPs as per the regulations of the Insurance Regulatory Development Authority of India (IRDAI), thus, insures women to continue to make regular savings for the next five years from the date of investment. In addition, the maxim of every investment states how capital appreciation is only possible if investments are made and continued for prolonged periods, i.e., 10-15 years. While the sum assured (or death benefits) ensures a protection cover to the loved ones of the women insured in case of their untimely death, the corpus obtained on maturity of the ULIP policy helps attain their financial goals.
Also, most insurance companies these days do not charge towards premium allocation and policy administration in addition to reducing mortality and fund management charges (FMCs). This means that today’s ULIPs combine the benefits of both insurance and investments at much lower costs when compared with other monetary instruments.
Investment in mutual funds to earn high returns has now taken a back seat owing to the 10 percent long-term capital gains (LTCG) tax imposed as per guidelines of the recently announced Union Budget. This means that while earnings from equity-oriented mutual funds exceeding Rs 100,000 will be subject to tax, the same quantum of earnings from ULIPs will be exempt from tax. The EEE (exempt-exempt-exempt) advantage that ULIPs enjoy means that the customers enjoy tax benefits at all the three stages, viz., investments, earnings and withdrawals.
Buying insurance to meet medical expenses
While advancements in research and technology have brought medical facilities to our doorstep, it did not have a reducing effect on medical expenses. Costs of treatment are rising, which means that sudden illness or diagnosis of any major ailment can result in sudden and tremendous cash outflow, thus, posing a great financial burden to the company. Rising medical bills are a cause of concern, which is why most families look for health insurance plans to meet unexpected expenditure.
a) Buying a comprehensive health insurance: Medical inflation means that the costs of diagnostic services coupled with treatment options have now become more expensive. Sudden illness can put at stake the family’s economic condition. With most people susceptible to lifestyle diseases, it is necessary that women make way to protect themselves from risks resulting from certain diseases.
The right kind of health insurance plan provides the necessary financial security to insured women against various situations including costs of hospitalization, medical surgeries and the various ailments that the women may be susceptible to owing to their family’s medical history. Though some companies offer health insurance as employment benefits, it must not be deemed sufficient to meet all kinds of expenses arising from medical exigencies.
b) Taking a critical illness cover: It is the innate nature of most women to lend more priority to the health of their family members than themselves. This means that very few women find time to take care of themselves and hence are more subject to health disorders than others. In addition, nature of their lifestyle or the medical history of their parents may result in some women being more vulnerable to debilitating disorders. This necessitates them to buy a critical illness cover for themselves as it serves to provide the insured women the necessary financial security while also getting themselves treated. A major advantage of having a critical illness cover includes that the insurance service provider is liable to pay the predetermined lump sum amount to the policyholders if they are diagnosed with any of the critical illnesses mentioned in the policy document. While buying the policy, the kinds and nature of critical illnesses are specified.
Taking a pledge
International Women’s Day is not only about celebrating life through fun-filled activities, it is also about protecting oneself. To love yourself also includes protecting yourself. And certain insurance plans not only insure the women concerned, but also protect their loved ones from unanticipated occurrences or events.
So log on to your computer, read the various insurance plans, make the necessary choice that suits your needs and make your investments today. Today’s insurance plans provide the benefits of both investment and protection. So, why not make use of them to secure yourself and your family from the risks that the future holds?
(By Anjla Dhir, Senior Director, Policybazaar.com)
