Securing Women’s Financial Futures: The Importance of Term Insurance in India
Women play multifaceted roles in Indian society, balancing professional and personal responsibilities. Despite progress towards financial independence, a significant disparity exists in life insurance ownership among women. Shockingly, less than 35% of life insurance policies in India are held by women, with a low life insurance penetration rate of just 2.8% of GDP. Term insurance emerges as a vital solution to address crucial financial security needs.
Traditional savings and investment methods alone are insufficient to safeguard a family’s financial well-being. Term insurance policies provide a high degree of coverage at considerably lower premiums, offering women and their families stability in the face of unforeseen circumstances.
Understanding Term Insurance
Term insurance is a type of life insurance that offers financial protection for a set period. If the policyholder passes away during this term, the designated beneficiary receives a lump-sum payment, often called a death benefit. Unlike traditional life insurance policies, term insurance doesn’t have a maturity benefit, making it a cost-effective option with extensive coverage.
Key Advantages of Term Insurance for Women
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Financial Security for the Family: Term insurance ensures that dependents do not face financial hardships in the event of the policyholder’s death. This coverage provides funds for daily expenses, loan repayments, and children’s education, thereby preserving the family’s standard of living without causing financial strain. For example, a term insurance policy of ₹1 crore can provide a working woman’s family with financial security, maintaining their lifestyle in her absence.
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Lower Premiums for Women: Women generally have a higher life expectancy compared to men, resulting in a lower mortality risk. Insurers recognize this by offering women lower premiums for the same coverage. This affordability makes term insurance a practical financial tool, allowing women to secure greater coverage at a reduced cost. For instance, a 30-year-old non-smoker woman might obtain a ₹1 crore term plan for approximately ₹8,000 per year, compared to a man, who might pay ₹9,000–₹10,000.
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Protection Against Critical Illnesses: Many term insurance plans include critical illness riders. These riders offer coverage for conditions such as breast cancer, cervical cancer, and heart diseases. These riders offer a lump-sum payout in case of diagnosis of certain medical conditions. Term insurance plans designed specifically for women also offer coverage for medical emergencies that may not be fully covered by regular health insurance. For example, a critical illness rider will help cover the treatment costs in case a woman is diagnosed with breast cancer.
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Financial Independence for Single Women and Homemakers: Term insurance offers a safety net for single women, ensuring financial security for aging parents or siblings. Homemakers, despite not earning a direct income, contribute significantly to household management. A term plan helps cover the costs of childcare and household expenses and ensures that family members won’t face financial struggles in their absence. India has nearly 70 million single women, many of whom have dependents, who can benefit significantly from term insurance plans.
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Tax Benefits Under the Indian Law: Premiums paid for term insurance are tax-deductible under Section 80C of the Income Tax Act. The death benefit received by the nominee is tax-free under Section 10(10D). Additional tax benefits also apply to riders like critical illness cover under Section 80D. For instance, a woman paying ₹50,000 annually for a term insurance policy can claim this amount as a deduction from her taxable income, lowering her overall tax liability.
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Customizable Coverage with Riders: Term insurance plans can be enhanced with riders. These include:
- Accidental death cover, which provides a higher payout in the case of accidental death.
- Critical illness cover, which provides a lump sum payout upon the diagnosis of serious illnesses.
- Waiver of premium, which waives future premiums if the policyholder is diagnosed with a critical illness or becomes permanently disabled.
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Ideal for Working Women: Women in diverse employment scenarios, from corporate jobs to self-employment or running businesses, can secure their income with term insurance. This helps in covering outstanding liabilities such as home loans, car loans, and personal loans. It prevents the financial burden from falling on family members. For example, if a woman with a ₹50 lakh home loan has term insurance, her family will not have to struggle with EMIs in her absence.
Bridging the Insurance Gap for Women
The insurance gap is wider for women, especially in rural areas and lower-income groups where financial security options are often limited. To address this disparity, initiatives like the ‘Bima Vahak’ aim to recruit women agents to increase insurance awareness and accessibility. Term insurance plays an important role in financial empowerment, and by opting for a straightforward term or life insurance policy, women can:
- Secure their family’s financial future.
- Protect against critical illnesses.
- Benefit from lower premiums compared to men.
- Avail of significant tax benefits.
- Customize coverage with riders.
Conclusion
A term insurance policy is essential for every woman, irrespective of her income level or profession. It ensures financial protection, peace of mind, and long-term security for families. With appealing lower premiums, tax advantages, and extensive coverage, term insurance represents a financially sound choice that can ensure women remain financially independent and prepared for the future. Exploring life insurance policies and term insurance plans can help secure a woman’s financial future and provide peace of mind for her family.
