Why Women Need Life Insurance: Closing the Coverage Gap

Life is full of uncertainty, and as women, it’s important that we take steps to protect ourselves and our loved ones from the unexpected. One crucial tool in achieving financial security is life insurance. However, despite its significance, many women in India still lack adequate life insurance coverage. In this blog post, you will explore why life insurance is just as important for women as it is for men and how it can bridge the coverage gap that exists today.

Financial Security for the Family

Now that you have an idea of what is life insurance, you can understand why is it important for your family. One of the key reasons why women need life insurance is to provide financial security for their families. As women increasingly join the workforce and become equal contributors to their households, having life insurance becomes paramount. In the unfortunate event of your demise, a life insurance policy ensures that your family is financially secure and able to meet their needs. Not only does life insurance act as income replacement, but it also offers tax benefits that can help ease the financial burden on your loved ones.

Let’s consider an example:

Riya is a working mother who contributes significantly to her family’s income. She understands the importance of protecting her family’s financial future and decides to purchase a term life insurance policy with a sum assured of ₹1 crore. This policy would ensure that in Riya’s absence, her family can maintain their current standard of living and cover expenses such as mortgage payments, education costs, and day-to-day expenses.

Sample Calculation:

Annual Premium: ₹10,000

Term: 25 years

Sum Assured: ₹1 crore

In this scenario, Riya pays an annual premium of ₹10,000 for 25 years. If she were to pass away during this period, her family would receive the sum assured of ₹1 crore, providing them with financial stability and security.

Critical Illness Benefit

Women are more prone to certain critical illnesses, such as breast and cervical cancer. To address the rising incidence of such health conditions, women need to have a life insurance policy that includes critical illness benefits. These benefits provide a lump sum payout upon diagnosis of a covered illness, which can be used to cover medical expenses and seek quality treatment without the added burden of financial stress.

Consider this scenario:

Shreya, a 35-year-old woman, has a family history of breast cancer. Recognising the risks associated with hereditary factors, she decides to purchase a life insurance policy with critical illness benefits. At the age of 40, Shreya is diagnosed with breast cancer. Her life insurance policy provides her with a lump sum payment, allowing her to focus on her treatment and recovery without worrying about medical expenses.

Investment for Long-Term Goals

Life insurance can also serve as an investment tool for women to achieve their long-term financial goals. Endowment plans, unit-linked insurance plans (ULIPs), and money-back plans are effective ways to invest money while enjoying the benefits of life insurance. These plans offer potential investment returns and can be tailored based on individual risk appetite and financial objectives.

Let’s look at an example:

Neha is a young professional who wants to save for her retirement while also having life cover. She decided to invest in a ULIP that provides both investment opportunities and life insurance protection. By contributing regularly towards her ULIP, Neha not only builds a corpus for her retirement but also ensures that her family is financially protected in case something untoward happens.

Sample Calculation:

Monthly Premium: ₹5,000

Policy Term: 20 years

Sum Assured: ₹50 lakh

Assuming Neha pays a monthly premium of ₹5,000 for 20 years, her ULIP can potentially generate returns based on market performance. At the end of the policy term, she will have accumulated a retirement corpus while enjoying life cover throughout the policy period.

Leaving a Legacy Behind

Life insurance allows women to leave a legacy for their loved ones, ensuring their financial stability even when they are no longer around. This is especially crucial for single mothers or female guardians who want to provide for their children’s future. By designating beneficiaries and setting up a life insurance policy, women can rest assured that their loved ones will be taken care of financially in their absence.

Consider this success story:

Meera, a widow and mother of two, had always prioritised her children’s well-being. She worked hard to secure their future but wanted additional support in case something happened to her. Meera purchased a life insurance policy and named her children as beneficiaries. Tragically, she passed away unexpectedly. However, thanks to the life insurance payout, her children were able to continue their education and maintain their standard of living.

A Comfortable Post-Retirement Life

As women plan for their retirement years, it’s essential to consider how life insurance can contribute to a comfortable post-retirement life. With increasing inflation and growing living expenses, relying solely on savings or pensions may not be enough. Money-back or annuity plans can provide regular payouts or survival benefits after maturity, offering an additional source of income during retirement.

Let’s explore a situation:

Radha and Ravi are a married couple nearing retirement age. They have saved diligently throughout their working years but worry about whether their savings will be sufficient to sustain them in retirement. To supplement their existing retirement plan, Radha and Ravi invest in an annuity plan that provides monthly payout options. This ensures that they can enjoy a better standard of living during their retirement years without having to depend on their children or worry about financial constraints.

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In conclusion, life insurance is a crucial component of financial planning for women. It provides financial security, income replacement, and peace of mind for women and their loved ones. Whether it’s ensuring the well-being of family members, covering outstanding debts, planning for the future, leaving a legacy, or securing a comfortable retirement, life insurance plays a vital role in closing the coverage gap. 

As women, it’s essential to recognise the importance of life insurance and take steps to protect ourselves and our families. So let’s prioritise our financial well-being and secure our future with life insurance.