While India’s life insurance penetration is on par with Asian peers at 2.8% of GDP, the protection gap is alarming, especially among women.
By Anil Kumar Singh, Chief Actuary, Aditya Birla Sun Life Insurance Co. Ltd.
Whether she is a professional and the sole breadwinner in her household, whether she works part-time during school hours, or whether she is the stay-at-home mother who manages the household, a woman is an important member of a family. Given her large contribution to the household, it is unfortunate that Indian women are still largely underinsured, especially when it comes to life insurance.
While India’s life insurance penetration is on par with Asian peers at 2.8% of GDP, the protection gap is alarming, especially among women. A large part of them lack basic knowledge about life insurance, its importance and its offers. Today, women have become important contributors to a family’s finances and future financial goals. However, we do not pay due attention to the risks in a woman’s life, which is sometimes even greater than that of a man. So it is obvious that a woman should realize her importance in the lives of her family members and opt for solutions that offer protection against life risks, can be an emergency fund and will also fulfill her goals. finances and those of his family in the future.
Here are some things women need to know to better understand life insurance.
What they need to know about life insurance – It is a myth that life insurance only provides death benefits, conversely; It’s much more than that. Life insurance is a risk protection vehicle through which an individual can insure himself against incapacity for work, save for retirement or protect himself against the loss of his estate. Life insurance offers a wide range of products that could prove useful in achieving financial goals, such as buying a house or car, planning a dream vacation, funds for a new business, planning weddings and even raising a child. It also acts as an income replacement tool and is a must for anyone earning.
Opting for life insurance – WHY, WHEN and HOW! Awareness is the key. It is important that women first analyze their goals and financial needs before opting for the right life insurance solution. They need to have complete clarity on what they want to protect and why, analyzing in more detail when they need to protect it. Post these, it should be decided which life insurance solution to opt for.
Any salaried woman can choose from the following plans depending on her life stage and financial needs.
If you have dependents, you must have Term coverage. This is the surest way to organize financial security, if unfortunately you are no longer present to provide for the needs of your loved ones. Also, if you have a loan, you cannot fail to have a term plan. The term plan offers complete pure protection at a relatively low premium.
It is vital to build a solid corpus for the long term. Endowment plans are for you. Providing the dual benefits of life coverage and goal-based savings in a single plan, Endowment Plans offer a lump sum payout and can give you assured returns regardless of market conditions. .
Women need to plan for a comfortable retirement and annuities can be one of the best options. The individual starts receiving a certain fixed amount which can be divided into a monthly, quarterly, annual or even lump sum payment after the completion of a predefined period.
Unit Linked Insurance Plan (ULIP)
ULIP comes with protection and investment integration where investment can be made in stocks, bonds or mutual funds. One can customize his investment according to his needs and his appetite for risk because the returns on investment are linked to market movements.
Once you know the plan, it is also prudent to understand the following factors before buying the right life insurance policy.
This is the total amount of money received in the event of a claim. Choosing the right level of coverage involves subtracting the benefits or coverages they already have from the total amount their dependents need. Also, to calculate the sum insured, the rule of thumb is to multiply the annual income by 10.
It is the amount an individual pays for the insurance policy. It is necessary to know the amount of the premium and the paying options. Depending on his financial situation, one can choose the premium option – for example, as a lump sum or the regular premium on a monthly, quarterly, half-yearly or yearly basis. It is best to compare the premiums and offers of different products to choose the right policy.
Every woman is unique and would want the insurance company to consider her as someone with unique needs. Therefore, it is prudent to check if the policy allows for customization and the addition of endorsements to meet their specific needs, rather than a one-size-fits-all policy.
It is important to know that life insurance rates increase as you age and develop health issues. The pandemic has taught us that life is always subject to various risks and uncertainties and therefore it is extremely crucial to protect them at the right time. Therefore, it is better to buy sooner rather than later. So understand your protection needs and design a financial plan now.
Life insurance companies today offer different types of solutions that offer guaranteed or more secure returns. From wealth protection to wealth creation, a wide range of policies are available. Women must first determine their needs, set their future goals and accordingly opt for the right life insurance policy and secure their future and that of their family.