1. Why life insurance is good investing option for women

Why life insurance is good investing option for women

Most women believe in saving for a rainy day, yet the probability of a single woman purchasing life insurance for herself is almost negligible.

By: | Updated: May 24, 2016 11:25 AM
Women insurance Women 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. (Photo: PTI)

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

  1. A
    Anand Doctor
    May 17, 2016 at 3:53 am
    This is a clic case of bad advice masquarading as good advice. As they say, half-truths are more dangerous than complete lies because they are more believable. We see something similar in this article.Yes, a lot of women are working and sharing the financial responsibilities of the family. Yes, in most cases they need to "buy" an insurance cover to protect their dreams for the family members eg. chidren's education. This can be done easily and for a very low cost by purchasing term life insurance.What they don't need to do is "invest" in a life insurance policy. There are much better alternatives including but not limited to Mutual funds, PPF, Tax-free bonds, NCDs, etc. They are also very poor instruments for retirement planning. Everyone needs a retirement plan and very few people have a proper retirement plan in place, be they men or women. However, an insurance policy would almost certainly not help the investor to create a meaningful corpus net of inflation. Same for a single mother's requirements. Essentially, the requirements of various people have been identified and narrated well. However, the solution recommended is nowhere near ideal. Trying to use an insruance policy as a cure for all financial requirements will give the same result as trying to use the same medicine for all diseases!
    Reply
    1. A
      Anand Doctor
      May 17, 2016 at 4:17 am
      This is an adver for selling insurance policies masquarading as a financial advice article.Several needs of the modern working women are correctly identified and narrated. However, the solution provided for the same is far from ideal. Yes, women are working and are shouldering more than their fair share of financial responsibilities in the family. Yes, they need insurance to protect their dreams for their family members eg. chidren's education. This can be done by simply "buying" a term life cover. "Investing" is better left to other instruments like mutual funds, PPF, depostis, NCDs, tax-free bonds, etc. There is no shortage of alternatives. What is required is a proper financial planning exercise to identify the needs/goals and plug in the most suitable products to fulfill each goal. Otherwise one may fall short evewn after working long and hard.For example, "investing" in an insurance policy is almost certain to NOT create the required retirement corpus net of all expesnes and inflation.Advising a life insruance policy as the single solution for all requirements is akin to prescribing the same medicine for all kinds of diseases. You can imagine the result!
      Reply
      1. S
        surbhi
        Jun 10, 2016 at 11:34 am
        Thanks for sharing. I believe everyone should buy life insurance because it is extremely necessary and also according to their specific needs . I am absolutely no expert but with some advice i have invested in TATA AIA life's money back insurance plan.The plan gives you the flexibility to choose from various term options to meet your financial commitments with the advantage of paying for only half the term..
        Reply

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