Embedded Value: Endowment policy empowers women with spending power

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Updated: Nov 24, 2015 3:27 PM

In India, buying an insurance cover is generally considered to be a man’s responsibility. However, a woman is generally the first beneficiary of all insurance policies.

moneyIn India, buying an insurance cover is generally considered to be a man’s responsibility. However, a woman is generally the first beneficiary of all insurance policies (Thinkstock)

In India, buying an insurance cover is generally considered to be a man’s responsibility. However, a woman is generally the first beneficiary of all insurance policies. Certain myopia on the part of all concerned has pushed the buying process almost wholly into the hands of the man in the family. The practice needs to change now with fast changing socio-economic profile of women in the family.

Insurance is a classical financial tool that has endured a couple of centuries and continues to exist in its core form in spite of sweeping changes taking place in the financial market. The concept of insurance in all its forms needs to be embraced by the masses, both male and female, to take maximum advantage of its unique utility in everyone’s life and even beyond.

A life insurance policy is a fine saving instrument as it inculcates the habit of systematic saving. Once taken, the policyholder keeps paying the premium as per mode of her choice for a fairly long term. Putting in money has to be regular and uninterrupted to keep the inherent benefits of life cover and growth of fund by accrual of bonus or investment of fund.

If a woman takes out a policy, she may designate the same for a particular purpose. Women not only need financial protection for themselves but they also need the same for their children. Every woman wants a bright career for her children and decent marriage for them. She also wants to continue her pursuit of happiness at all stages of her life, be it through her husband, children or grand children.

In order to save for a particular lifestage requirement, endowment policy is a must-have product. It empowers a woman with spending power. This policy systematically accumulates savings to a sizeable amount with handsome growth with the accrued bonus. More than one policy, of course within the affordable limit, can come handy to her while welcoming a daughter-in-law or while celebrating the arrival of grand children in the family. The husband’s need to provide for such policies on the life of wives, if non-earning, to give them a feeling of self-respect and self-confidence. The policies could be very handy in generating emergency money through loan under such policies with very negligible paper work. This is a wonderful substitute to the personal loan which very often people are obliged to raise at a very high cost. A long-term unit-linked insurance policy (Ulip) endowment policy can also serve as an excellent tool to accumulate fund with financial security to dependents to buy a lifetime annuity after reaching an age when she would need a regular cash flow without being forced to work or being fully dependent on husband’s reducing income.

There are insurance policies that combine the benefit of reimbursement of expenses on women-specific health problems with the features of an endowment policy. Such policies must be purchased for women or women must purchase for themselves so that they surmount such situations with dignity and without depending on anyone. These days, a large number of girls avail of education loan. Generally, banks ask for a life insurance policy as a collateral security. Hence it is advisable to take policy on the life of the girl child so that the policy taken at very low premium rate can later be used by parents for securing the loan without the additional burden of taking a new policy. A life insurance policy on the life of a wife taken at an early stage can be used to borrow additional amount of loan for housing purpose, the surrender value of the policy would help in enhancing the loan limit if husband and wife jointly apply for loan. Otherwise, the housewife will have no tool in her hand to contribute to increase the loan limit.

It is also observed the worse sufferer in any calamity or mishap is the woman in the house. If a house is burgled, she loses most. Of all items stolen, jewellery accounts for the highest value. Similarly, in case of high voltage fluctuations, the electrical items that get damaged first are invariably those that women use such as microwave, refrigerator, TV or washing machine. Hence she is the worst sufferer. The same items are mostly damaged during flood or cyclone. In case of earthquake, however, the sufferers are both men and women. Hence women must consciously and carefully buy the householder’s policy as it is more in their interest. They need to be made aware of the advantages of insurance in day-to-day life. It is generally seen that husbands do not look beyond the mandatory motor insurance orthe employer-managed health insurance.

It is therefore in the interest of women to understand the value of insurance in their lives and to demand and own suitable life as well as non-life products.

The writer is former MD & CEO, Star Union Dai-ichi Life Insurance

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