5 Reasons Why Women Should Get Life Insurance

Women wear many hats, play many roles, some of which include providing for their family. In the current situation, most women are the sole breadwinners of a family. In such a scenario, it pays to think twice about how little control we have over the events of our lives, namely birth and death.

In the unfortunate event of a disability, lay-off or demise of a loved one, especially a breadwinner of the family, the dependents are left to fend for themselves. Which is why, it is important to make prior arrangements that will help your dependents financially even in your absence. Fortunately, in India, we have excellent insurance plans that are designed specifically to meet the financial needs of women.

Why should women get life insurance?

Purchasing a life insurance plan can be beneficial to you and your family in many ways. The following are the reasons why women should get life insurance:

• Longer average lifespan: The average lifespan of women is longer than men. Therefore, insurance companies offer better life cover for women at a nominal cost.
• Discounts: Some insurance providers offer special discounts for women policyholders of certain age and to those in good health.
• Breadwinners: Whether you are a career woman or a part-time worker, it helps to have a comprehensive life insurance cover that offers savings in addition to life cover. In the unfortunate event of the demise or disability of the life insured, the family will be provided death benefit to help them through the monetary loss.
• Exclusive insurance plans for women: Insurance providers are now offering plans that are specifically designed to meet the needs of women. Choose a plan that offers maturity benefit and critical illness rider in addition to life cover and savings. Some plans offer cover for pregnancy and childbirth related complications.
• Monthly income: Few life insurance cum investment plans offer monthly income to the dependents in the unfortunate event of the demise of the life insured to meet financial contingencies. Some plans offer regular cash payouts and allow partial withdrawals to enable policyholders to meet urgent financial requirements.

Top life insurance plans for women in India

Some of the top life insurance plans provided for women in India includes:

• SBI Life Smart Women Advantage Plan: This a traditional endowment plan, offering life cover, savings, and critical illness benefit to women. With this comprehensive insurance plan, designed exclusively for women, policyholders have the optional benefit of receiving cover for pregnancy and childbirth related complications.
• Shriram New Shri Vivah Plan: Wedding is an important part of one’s life. Shriram Life Insurance offers an excellent life insurance plan to loved ones embarking on a marital journey. This is an affordable insurance policy, offering double life insurance cover, monthly income in the unfortunate event of the demise of a loved one, maturity benefit, and bonuses.
• HDFC Life Smart Women Plan:  This a life insurance cum investment plan, designed to cater to specific events in a woman's life such as career, marriage, and health. It allows partial withdrawals and additional cash payouts to help with urgent financial requirements.
• LIC Jeevan Bharati-I Plan: This life insurance plan is offered by Life Insurance Corporation of India exclusively to women. The plan comes with the option to add 3 different riders for enhanced protection such as the Accident Benefit Rider, Congenital Disability Benefit Rider, and Critical Illness Benefit Rider.
• TATA AIG Wellsurance Women Plan: With this health insurance plan for women, policyholders can get a fixed lump sum benefit for 11 critical illnesses, daily hospital cash benefit, convalescence benefit, and cosmetic reconstruction surgery benefit for accidental injuries.

When choosing a life insurance plan, it is advisable to do sufficient research and purchase the insurance plan one that best suits your insurance needs. Most insurance companies have made it easy for customers by arranging for a personal insurance advisor to guide them with the selection process.

What was expected by the Insurance Industry from Union Budget

The Union Budget 2017 is of great significance as it came with reformatory measures touching all important facets of the Indian economy. But one of the striking aspects of the 2017 budget presentation was that the railway budget was combined with the general budget. In its second half of governance, the BJP led government is pushing forward all the plans and policies formulated in the first half and capitalizing over the same. Analysts observe that this move by government will find its intended results in the 2019 general elections. Furthermore, it is the first time in decades that a Union Budget has been presented on the first day of February, a slight deviation from the traditional way of budget presentation. It clearly conveys that the government is highly determined to start with the implementation part of the finance bill before the current fiscal year ends. Another notable feature of the Union Budget is that it was announced at a time when several national and international events of economic importance were taking place in the country.

Effects of demonetization

The high quantum of cash deposits in banks in a very short period is a clear indicator of the success of the demonetization move. It is expected to bring positive changes on the economy as a whole, since the income tax collection rates too will improve in the coming days. And now with the increase in tax exemption slabs, the short term decline in consumption which largely affected the retail sector will also be counterbalanced. Even though the government has been taking steps to fully digitalize currency transactions, it is also suggestible that an efficient mechanism be devised to stop further creation of black money.

Life Insurance and Union Budget

Life insurance industry has a key role to play in the development of a nation. Life Insurance is one of the most important financial tools that support long-term investments and comes next to banks in terms of customer preference. Furthermore, it was the largest contributor in the infrastructure development sector with over Rs.3 lakh crores of investments in the fiscal year 2016. Insurance companies also hold a considerable share in government securities and it was at 22% as of March 2016. Insurance analysts suggest that more effective reforms should be implemented to bring the industry on par with other comparable products in the financial market.

At present, government requires every insurance company to invest 50% of its life fund in government securities, which is much higher when compared to the 20.75% Statutory Liquidity Ratio (SLR) applicable to banks. This rule if relaxed will highly benefit the insurance segment as a whole and will pave way for improvement of fund performance. Apart from the tax exemptions given in Section 80C, the government should have specified an additional limit on deductible amount underscoring life insurance. Such a change will encourage more people to opt for life insurance plans and gain financial stability and protection through long term investments.

Tax treatments should be based purely on the nature of the products and not the platform that offers them. For example, the tax exemptions on NPS is much higher than the benefits offered for life insurance plans. Experts suggest that the life insurance policies should qualify as capital asset and only the returns on maturity should be taxable.

But on the whole, the budget didn’t have much to offer to the insurance sector. The increase in taxable income limits could have been augmented with a similar increase in the tax exemption limit of insurance policies. However, in a move to promote insurance as a risk mitigation tool, the government has upped the protection offered under Pradhan Mantri Fasal Bima Yojna (PMFBY) to cover 40% of crop area.

At present, the government aims at pursuing the long term goals for economic development by focusing on areas such as rural development, digitization, infrastructure development, etc. In general, the insurance sector needs a gentle push to bring the desired outcomes. The following points needs to be looked upon for boosting the insurance penetration in the country:

• Higher tax exemptions on insurance products
• Home insurance to be made mandatory
• Annuity to be moved out of tax bracket
• FDI relaxations

How to Select The Right Life Insurance Cover

An increasing number of people purchase life insurance policies with covers as much as 10 times their yearly salary. While a high sum assured is certainly a good move considering the benefits you will be eligible to receive upon maturity, it is important to calculate the amount of cover you need in a systematic and diplomatic manner. The main reason why you will be purchasing a life insurance policy is to ensure that your family will be financially secure even in the case of your unfortunate and untimely demise. So long as you have individuals who depend on you for money, a life insurance policy becomes highly important.

There are different ways through which life insurance cover can be availed by customers, the simplest and cheapest of which is considered as term insurance plans. The premium payments made towards a term insurance plan secures the life of the policyholder, and in case of the unfortunate and untimely demise of the policyholder, the beneficiaries / nominees of the plan will receive the entire cover amount, thereby making it extremely important for customers to determine how much life insurance cover they should purchase.

Since the financial requirements of each individual is different from the next person, your liabilities must be taken into consideration when determining how much cover you need. You will also have to consider the extent of dependency on your shoulders. If you have a high number of dependents in addition to outstanding loans / balances that need to be cleared in case of your accidental death, the life insurance cover you must purchase will be relatively high.

While most people choose life insurance cover worth 10 to 15 times of their current yearly income, you will have to think about whether or not investing such a percentage of your salary will affect your lifestyle or the standard of living of your family. Some of the biggest factors that must be considered before choosing your life insurance cover are as follow:

·         Monthly expenses

·         Outstanding loans

·         Current age of your spouse

·         Life expectancy of your spouse

·         Current life insurance cover

·         Overall assets held by you, not including the value of your residential property

Following is formula into which the aforementioned points can be incorporated to help you attain a clear idea about the amount of money you should choose as life insurance cover:

Step 1:

Inflation adjusted monthly expenses of dependents = A

Life expectancy of spouse – current age of spouse = B

C = A x B

Step 2:

Total outstanding loans = D

Current life insurance cover = E

Overall assets, not including residential property = F

Total life insurance requirement = C + D – E – F

While taking inflation into consideration, it is recommended that you also consider it at a rate of 10%, and the life expectancy of your spouse must be dependent upon the life history of the family and considered slightly higher than the average of the family in order to be safe. In case you find any difficulty in computing your life insurance cover on your own, online calculators can always be used as they are effective and efficient in providing accurate results.

Computing your life insurance cover requirements is always a good idea as it will help in ensuring that you won’t be under- or over-insured. Although term plans are the ideal insurance options, make sure to go through all your options and read through the fine print to find the policy that will best suit your distinctive financial requirements.