The insurance market in India is showing clear signs of expansion, asking insurance providers to be innovative in their approach. Insurance as a financial product occupies an important place in our current complex financial world. It has become so because risk, which can be insured, has considerably increased in almost every walk of our lives. This has naturally led to the overall growth of the insurance sector as well as the evolution of a variety of insurance covers. In India, the overall market size of the insurance sector was projected to be around US$280B in 2020.
With such huge market potential, one may believe that it’s due to the significant penetration density in the country. However, India’s insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1%. Another stark statistic provided by IRDAI annual report for FY20 showed the number of life plans purchased by women during the financial year dropped 11.76% on a YoY basis. Women contributed 34% for the first-year premium in FY20, down from 37% the year before. Moreover, nearly one-third of the policies bought by women came from just three states – Maharashtra (11.98%), Uttar Pradesh (9.87%), and West Bengal (10.60%).
This then begs the question – why women are lagging in being part of such a crucial financial product?
The answer is not so straightforward. One key aspect that does crop up is the lack of awareness among women about life insurance as a financial product and its benefits. In this article, we try to precisely address that – things women should know while purchasing a life insurance policy.
Winds of Change
Insurance policies are designed to help people have a financial cushion for their loved ones and prepare for emergencies. Women have always played the role of chief caretaker in any family. Moreover, in recent years, we have witnessed a progressive shift in society, with women taking a substantial lead in contributing to the growth of the household. While they have been a crucial element in managing household finances for years, they now need to cater to a completely different set of financial objectives for themselves.
It’s Great to be Woman
One of the most significant benefits of life insurance for women is that it is cheaper for them. As per several research studies, women tend to outlive men, and thus, life insurance premiums are considerably lower for them than men. It is often advised that purchasing term life insurance is a more affordable way to get greater coverage. Plus, buying a policy at a young age will help further cost reduction as the premiums go up with advancing age.
Contributing to Family Income
Conventionally, small savings have been the primary domain of Indian women. However, with insurance products such as Unit Linked Insurance Plans or ULIPs, they can save and generate better returns and contribute to the family income while being secured. Additionally, as more women enter the workforce and become independent earners, they need to protect their income. Life insurance can offer a promising avenue as a savings mechanism to boost their financial independence and habit of long-term savings.
Not a Breadwinner? They Can Still Be Financially Independent
What’s more important is that life insurance is not only essential for working women but even for single women, homemakers, single mothers (divorced or widowed) to help them achieve financial independence at various stages of their lives. A life insurance payout can go a long way in covering such costs and offering a financial safety net to their families.
It Helps During Pregnancy
It is a common myth that pregnant women are ineligible for life insurance. They need to approach the right insurance provider to get comprehensive coverage for their pregnancy. While it’s always advisable to have a life insurance plan before pregnancy, it may be a mistake to purchase it after childbirth. Often women develop certain conditions during pregnancy, such as gestational diabetes or postpartum depression, making it harder for them to get coverage or incur higher premiums.
Creating a Legacy
Women are often considered the “Money Manager” for a family. As we move towards an even more progressive society, their role will only witness an increasing evolution. Naturally, creating a legacy must be a part of the thought process of every woman. Policies such as whole life plans can act as an ideal mode of accumulating wealth for the next generation and ensure that the children and grandchildren receive the sum assured in their absence. Single mothers can use the maturity amount as a source of steady income to cover their child’s existing and future expenses.
For most women, family’s security, both physical as well as financial, is the biggest priority. A right insurance product can provide a financial security net for themselves as well as their family. In case they are earning, they can also contribute to the family’s income or specific goals through savings-oriented policies. Such policies provide an avenue for long-term wealth creation, healthy returns, and tax benefits along with the primary objective of protection. Similarly, insurance will act as a strong backup plan to tackle unforeseen circumstances. Having a substantial cover goes a long way in ensuring a quality lifestyle and managing educational and other expenses in the absence of their partners.
Single women can opt for a life insurance plan that helps secure their savings, income, and further investments. Moreover, the policy can provide funds to pay off debts, loans, and taxes, which otherwise would have become a burden for their family members.
Today, having a full-proof financial plan is required independent of the earning status of the member. As the risks associated with different walks of our lives keep increasing, the importance of insurance has never been greater. Women need to be exposed to the right insurance product as early as possible to ensure the financial safety of themselves and their loved ones. Over the years, insurance products have evolved and offered a wide range of cover and other benefits. Choosing the right coverage depends on various factors such as individual requirements, health demands, and financial objectives. Buying comprehensive life insurance cover will thus be the right step in empowering women in our country.
Views expressed above are the author’s own.
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