Nature has created men and women differently but their reason to buy life insurance remains broadly the same. Both men and women buy life insurance to protect their family, replace lost income in case he / she dies, provide for own retirement, fund long-term needs such as children's education and marriage and to pay off mortgages. But here comes the difference. Though the needs are the same, men and women think and behave differently in many aspects of life, including financial planning and protection. The financial needs of women become different because they have higher life expectancy than men, which results in more women living alone after their partner is gone.
World over it has been found that women have either no or little life insurance. Max New York Life - NCAER India Financial Protection Survey revealed that the same is true for India also. Of the life insurance owners in India only 14% are women. Is that women do not require life insurance or is it lack of awareness of the need for life insurance for women? Even in a highly developed market like US, it has been found that though 59% of the women own life insurance as compared to 64% of the men, the average death benefit on men is nearly double that for women.
Homemaker is one large group of women in India. Let us focus first on the needs of this most important group. Many a time it is argued that homemakers do not require life insurance as they are not the earning members and their loss would not result in financial stress. However, it has been found that it is not true. In fact, it has been found that it adds up to significant cost to get the services of homemakers through third party and hence require life insurance for homemaker women also.
Modern women, who is an earning member and an equal partner in managing the finances of the household, requires life insurance as much as the earning male members. It has been found that when it comes to planning for long-term needs like children education, marriage and other social events, women are better planners and take the lead in the household. But to meet such need the instruments opted by them are not appropriate. Women should consider bundled life insurance products that offer both protection and wealth creation to meet such needs. Unit Linked Insurance Policies (ULIP) and other endowment policies are found to be the best tools for such needs.
The women in two income households should also consider taking financial protection cover. She should consider if anything happens to her and the income she generates, would her family be able to maintain the standard of living. Would her children be able to achieve their education goals? They should consider taking protection cover through a combination of term and bundled products, so that if anything happens to her, the life could go on as earlier.
As women have higher life expectancy, they also need to plan for their financial security for those years when their caring partner would not be there to provide for their financial needs. Women should consider retirement planning instruments, which continue to give them annuities (pension) till their last days. Several retirement plans and whole life plans are available in the market. The need for life insurance is most pronounced in the case of single women heading a household. This could have happened due to divorce or the death of spouse. As a single parent, she may be the sole breadwinner, responsible for the support to her children and hence must invest in financial protection insurance so that the life insurance can replace the income she is bringing to the household.
Do single women, with no children to support, require life insurance? She may not have anyone to support but may still have loans and mortgages. These obligations, which could fall on parents or other loved one, can be met through life insurance. Life insurance is also important to protect her old age and cover against the risk of living too long.
It would not be incorrect to say that for women at any life stage and of any demographic profile, life insurance is important to meet her financial protection and long-term wealth creation needs. It is never too early to invest in life insurance and hence the day you start earning, you should start investing in life insurance. At the same time it is never too late. If you have not started, the cost of getting financial protection and creating corpus to meet your financial needs would be higher, but it is never too late to start.
The women of all age groups and of every profile should consider her needs, consider income and expenses and must allocate a certain portion of disposable income towards buying appropriate life insurance. The best option is to consult an expert financial advisor and take immediate action on the suggested financial plan to live a stress free life.