Insurance Plans Every Woman Must Know About
With debates about pay parity, gender gaps, etc. continue to sprout across the globe and gain momentum as a movement in itself, it is heartening to see statistics reflect an increase in the number of women who are choosing to be financially independent. As per latest reports, working women today make up over 40% of the global workforce. Over 40% of all households are dual-income households and nearly 4 in 10 women are the sole breadwinners for their family. However, despite the financial independence that comes with securing an enviable education and a coveted job, working women often fail to secure financial freedom for themselves.
Isn’t it one and the same – financial independence and financial freedom, you ask? Well, NO!
Financial independence is the ability to maintain the current lifestyle. Financial freedom, on the other hand, is the ability to maintain your lifestyle until retirement and beyond, having secured yourself against any rough storms you may have to weather. It requires deliberate thought, research and planning and is not an automated process set in motion simply because one has the earning power.
While most men seem to think ahead and get themselves a wide and prudent insurance portfolio (in addition to their investment bag, of course), working women seem to be falling behind in the race, with only 70% women having an insurance portfolio of their own. Most women, regardless of their career choice or marital status, seem to fall back on their male counterpart to handle their financial planning. It is, therefore, no surprise that women’s post-retirement safety-net is often relegated to the sidelines.
It is usually enough for married women to think of a ‘common retirement pool’ or a family healthcare plan or an exigency fund as their go-to solution kiosk for anything life may choose to throw at them! Even single women seem to put financial planning, especially when it comes to their insurance portfolio, on the backburner.
Here are five main reasons women need to start thinking of individual coverage and plan specifically for their retirement irrespective of there being a common family plan.
Firstly, no matter how much you aspire and perspire for it, parity in pay is still a distant dream for India's working women. Therefore, the ability to accumulate funds is, sadly, still a tenuous process for women.
Secondly, working women traditionally take more career breaks than men, if at all, and any woman on the journey can vouch for how difficult it is to get back on the bandwagon. The process is not easy and women often find themselves in roles that are lesser than their competency or candidature would have availed sans a break.
Thirdly, women tend to have a higher life expectancy and therefore, a higher corpus is required to account for a longer life and the inevitable health expenses, including the risk of chronic conditions.
Fourthly, women have a smaller risk appetite when compared to men regarding their investment portfolio. Women are content to accumulate lower returns as long as they guarantee higher safety as opposed to high-risk investments and are thereby limited in their power to build meaningful wealth.
Lastly, and unfortunately, there is an impractical aspect to female financial planning. For example, a lesser tax liability on their income opens them up to holding debt investments for their male counterparts as opposed to equity investments. Furthermore, an unfortunate separation or divorce may cause an unfair asset distribution, skewed in favor of her spouse. Very often, women who tend to leave their finances to the ‘common household pool’ find themselves lost when they are widowed or separated, with no idea of where to start.
Therefore, it is important for women to start investing in their individual financial goals and invest in their individual insurance portfolio. While we’ve covered a gamut of investments a woman must make, below is a list of must-have insurance policies for every woman, regardless of her role in the household or earning power:
1. Health Insurance
When it comes to matters of health and long-term financial planning, the old adage ‘health is wealth’ is pure gold. Anything from a basic indemnity policy to critical health insurance to an intensive plan that accounts for maternity care with both prenatal and postnatal benefits are a must for every woman who wants to have a family. Additionally, a custom policy that is more suited to women’s health and the associated risks than a ‘one-size-fits-all’ cover may be useful here. Lower premiums and a wide range of coverage for longer spans are the perks of multiple offerings in the market like Joy by Religare, Wellsurance by Tata AIG Health Insurance and HealthGain by Reliance.
2. Life Insurance
While most employers offer a basic group life insurance plan, it is wise to invest in one that may cover any costs/expenses/debts for your dear ones after your death. Regardless of your marital or working status, life insurance could be your best bet for ensuring financial independence for any dependents. It is advisable to choose term insurance if you are looking for flexibility and lesser expensive premiums. However, if you wish to work with an investment component to build cash value for growth, permanent life cover may be the way for you.
3. Property insurance
A good homeowner’s insurance, typically built into your mortgage payment (if you have secured a loan for buying property), will insure you against any damage to what can easily be deemed one of your most valuable assets. If you are renting a place, a good renter’s policy can cover your replacement costs against damages because of fire, disaster or burglary.
4. Auto insurance
Apart from replacement or repair costs for your vehicle in the case of accidents, an intensive auto insurance policy also covers bodily injuries or death of another person, legal defense costs and a medical coverage plan for treatment regardless of blame.
Thus, quite evidently, it is prudent for working women to invest in a good policy that provides ample coverage for any unforeseen circumstance. Needless to add, most insurance policies come with a wide array of tax benefits and today seems like as good a day as any to start investing in yourself, ladies!
(Edited by Neha Baid)
