Why Women Need Insurance

There are umpteen reasons put forth to explain why women have remained uninsured, from the fact that many of them are home-bound to their relatively low exposure to risks. However, the ground realities and the perspectives on women and their financial worth has changed far too much for insurance to be a non-issue for them any longer. Jay Sampat explains

A few years ago, the cases of women being covered by LIC policies were as few as 15 per cent. With more women in metro cities having entered the job market, this number is now in excess of 30 per cent. In spite of this growth, the reach of insurance among women in India is on the lower side.

An oft-heard belief which echoes the unwritten norm that a woman’s life doesn’t require to be insured is, “My wife doesn’t contribute any income. What is the need for insurance?” However, recent surveys suggest that the western world thinks otherwise. According to them, the human life value of a non-earning spouse in the US market – a homemaker with children – worked out in the range of between USD 150-400 per week.

With the emergence of the nuclear family and rising living standards, this principle is gradually beginning to be applied in India too, though the instances may be limited. In fact, experts suggest that women need insurance to a much larger extent. In Indian society the husband tends to be three-five years older than the wife, as a result of which, the woman typically survives for at least seven-nine years or more after the husband's death. Naturally, during this period, they would need a regular stream of income to live independently with dignity and confidence. Also, in India, women outlive men and therefore need a larger retirement kitty. Moreover, many women are less likely to receive a pension and accumulate retirement benefits, as they spend less time in the workforce.

In the case of working women, their basic needs are exactly similar to that of a working man, and hence the complete range of insurance products applies to them. In fact, life insurance makes sense even for single working women who have dependants. Some other reasons why insurance is important for women are:

1. They are at a higher risk of cancer.
2. On a running policy, additional riders can be purchased at a nominal cost. These add-ons cover specific women’s health issues like reconstructive surgery benefits due to breast cancer, congenital disability benefit of children, pregnancy complication benefits, etc. Such add-ons can be attached to all unit-linked plans and most traditional products.
3. Double-income homes almost invariably build their lifestyles on the combined income value. So, the loss of the woman and her salary could put the family in a problematic situation.
4. Insurance can help in forced savings for the retirement period.

To get started, start building a portfolio aggressively when single, in line with your risk appetite. At this stage in life, one can consider a unit-linked plan with an equity skew since one can afford to take high risks. Once married, one needs to budget for savings as a couple. It is a good idea to continue with the unit–linked wealth creation plan and add a term cover to protect home loan liability. Once children are born one needs to start thinking much more long-term. One can buy children’s plans on investments and insurance, primarily to secure their future education.

Also, ensure that you and your family have health cover. Experts suggest that a woman should insure herself when single and increase the cover by 25 per cent when getting married and on the birth of a child. Experts also suggest that a housewife without income should have life insurance that should be based on the family’s living standard. One possible benchmark is that the value of her insurance should be a third or fourth of her husband’s cover.

Over the past two decades, India has seen a great deal of socio-economic change. This has also necessitated some serious changes in perception about the role of women. More and more women are becoming contributors to the household budget and shaping their own financial destinies instead of relying on family. When their financial self worth is now in their own hands, isn’t it time that women step up when it comes to insurance too? It cannot be overemphasised then, that women do need insurance.