Most women believe in saving for a rainy day, yet the probability of a single woman purchasing life insurance for herself is almost negligible. However, we are seeing a change in the way women are opting for non-traditional saving methods over fixed deposits and recurring deposits. They are now moving towards financial liberation by exploring insurance and other financial instruments as a savings mechanism to augment their notion and habit of long-term savings.
Need for life insurance
Peace of mind: Besides financially securing the future of the family, the right life insurance policy serves as a safety net for children, parents who need caretaking, or siblings with special needs, or other dependents.
Cost effective: Buying a policy early on will lock in coverage while one is still in good health and qualify for the best rates. It’s a safety net against eventualities of death, permanent disability, financial emergency, or sudden loss of income. It helps build a corpus for a child’s education, marriage, retirement. Women can also avail of preferential rates for some specific products.
Long-term wealth creation: You can invest in life insurance policies that will mature around the time to help you fulfil your specific goals. Investment-oriented policies offer benefits of protection, savings, good returns and tax benefits. However, these need to be viewed as bonus rather than primary consideration.
Retirement: Savings are difficult in retirement as you transition from one phase of life to next. Aging comes with mounting medical expenses. Also, thanks to medical and lifestyle innovations, it comes with a life span expansion where the period between 60-90 years makes for better health, productivity, and revitalised energy. In these terms, the retirement phase can mean both. For aging and illness, a corpus for medical expenses. For renewed penchant, a corpus to aid international travel and fuel other hobbies, activities, and passions.
Legacy: In case of an eventuality, when you are not around to take care of your family, they will be grateful that you provided the best you could for them. If there’s a cause that you’re passionate about or you’ve got someone you’d like to take care of financially (even if they’re not dependent on you now), purchasing a life insurance policy helps.
Who needs it?
Single women: Often, women with no dependents think that it’s pointless to buy life insurance. What is disregarded is that life insurance can provide funds to pay off certain loans, debts, mortgage and taxes, which might otherwise become a liability for family members. A young, healthy, single woman can purchase life insurance at reduced premiums. The older one gets, the higher the premiums will be.
Working women: A working woman’s income can have a significant impact on the quality of her family”s lifestyle. In the eventuality of death, life insurance protects her family by providing proceeds to meet everyday expenses, handle contingencies and cater to essential overheads.
Single mothers: Whether widowed, divorced, or a single mother, she is responsible for the child’s support. Life insurance offers a steady income to cover existing and future expenses of the child, in case of the mother’s demise.
Factoring in age, debt, whether or not one has children, the number of children and their age, overall health and the amount of money the family will need to survive — select a policy that meets one’s specific needs. Depending on the investment, objectives and risk appetite, one could select from traditional products, unit-linked insurance products or term plans.
It’s advisable to re-evaluate policy requirements with each life change. Life insurance is an attractive tool that helps address major expenditure during your lifetime. You can be assured your dreams for your family’s financial security and stability stay on course in case of any eventuality.
The writer is MD, Kotak Mahindra Old Mutual Life Insurance