Best Term Insurance Plans for Women

A few days ago, one of our advisors got the chance to encounter a humorous interaction with one of our clients -

Our client was a 30-year-old male who had purchased a health insurance plan through us 2 years ago. Recently, he got married and, considering his financially savvy nature decided to purchase a term insurance policy for his wife and himself. They were both 30 years old, with similar income slabs and no pre-existing medical conditions. So, naturally, his general expectation was that they would get a plan (one for each of them because the tax benefits would be maximised) from the same insurer and have the same (at least close enough) premiums to be paid at the end of each year.

However, there was a slight plot twist - for the same sum assured, our client’s wife ended up paying almost 20% less than the premiums computed for her husband.

Our male client grumbled and muttered something about how all the wedding gifts were mostly for her, how she received additional cash gifts, and how she enjoyed their wedding more. And now, to add insult to injury, her premiums will also be lower!

Naturally, our advisor had a good laugh and sympathised (and empathised) with our older client and then helped him with the entire purchase process!

So, what exactly happened? Why are term insurance plans for women cheaper? And what would have happened if the woman in the discussion hadn’t been a working professional - would she still get a term insurance plan?

If you are planning to buy a term insurance plan for a woman (working or otherwise), this blog will be the ultimate guide - read on!

Best Term Insurance Plans for Women in India

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Term Insurance for Women: Housewives and Working Women

Let’s first understand why we have taken up term insurance for women as a separate topic (after all, you don’t come across blogs on “term insurance for men”!).

Term insurance as a financial product is a pure protection tool - the sum assured that you are found eligible for and finalise upon during the time of purchase is disbursed to the beneficiaries to ensure the smooth functioning of a family in achieving their life stage goals, after the passing away of the sole breadwinner of the family (if he/she passes away during the policy tenure. Now, this cover amount is significantly influenced by your income slab, indicating that you need to be self-employed or salaried personnel to be eligible for term insurance plans.

However, in the case of women, some may not be either of these - we are talking about the homemakers or housewives. Now, undeniably, they are largely responsible for aiding in a child’s education and maintaining the family’s chores that contribute to its stability and thus help a breadwinner to peacefully continue with his/her profession. However, there is an absence of a steady source of income. Without income, how do insurers offer an income replacement financial tool like a term insurance plan? Additionally, even in the case of professionally earning women, do term insurance plans and their eligibility criteria or premiums differ?

To get a deeper insight into this topic, we have divided this entire blog into 2 parts - term insurance for housewives and term insurance for women with sources of income (salary/business) -

What are Term Insurance plans for housewives?

So, can housewives have a term insurance plan? What are the involved eligibility criteria?

Well, for starters, yes, housewives can have term insurance plans. However, since, in their case, they are homemakers with no specific source of income, their eligibility is largely dependent on the income slab of their working spouse. Here’s a quick look at the eligibility criteria for housewives in the case of the top 3 insurers in the market.

Now, the importance of term insurance plans for women is a separate topic that we will encroach on soon in this blog. However, another primary question that often comes up among potential policyholders is, since term insurance plans are income replacement financial protection tools, why do insurers offer them a term plan? A quick and financially motivated answer is - HLV (Human Life value). While it’s true that housewives don’t have a stipulated mode of salary income, they make a significant contribution to ensuring the smooth running of the household.

If you want to choose a suitable term insurance plan for a woman whose sole role is as a home-maker, here’s what you need to remember -

• Financial Contribution: Assess your financial contribution to the household, even if you're not employed. Consider the value of your services, such as childcare, household management, or caregiving. This will help determine the appropriate coverage amount.
• Spousal Coverage: If your spouse has a term insurance policy, check if it covers your financial needs adequately. If not, consider obtaining a separate policy to ensure comprehensive coverage for your family's future.
• Personal Loans and Liabilities: Evaluate any personal loans, debts, or financial obligations you have, such as credit card bills or mortgage payments. Calculate the coverage required to settle these liabilities in case of unfortunate events.
• Critical Illness Coverage: Look for term insurance policies that offer critical illness riders. These riders can provide financial support in the event of a severe illness, ensuring that you have the necessary funds for treatment and recovery.
• Flexibility and Convertibility: Choose a policy that offers flexibility and convertibility options. This allows you to convert your term insurance policy into a permanent life insurance policy later, should the need arise.
• Long-term Financial Planning: Although you may be currently unemployed, consider your future career plans and potential income. Select a term insurance policy that provides coverage for a longer duration, accommodating your future employment prospects.

What are Term Insurance plans for working women?

In the case of working women with a source of income, insurers are much more willing to offer term insurance plans. In fact, considering the chances of differences in wages across industries, women policyholders can often be offered a higher sum assured or a lower premium as compared to their male counterparts. Here’s a quick look at some of the best term insurance plans for working women -

When it comes to selecting the best term insurance for employed females, it's essential to consider various factors that align with their unique needs and circumstances. Here are some key points to remember:

• Protection for Loved Ones: Term insurance acts as a safety net, providing financial protection for women's loved ones in the event of an unfortunate incident. As women often fulfil multiple roles in their families, including being caregivers and breadwinners, it is essential to ensure that their dependents are adequately protected. Term insurance can help replace the loss of income, pay off debts, cover educational expenses, and maintain the family's standard of living, granting peace of mind during challenging times.
• Affordable Premiums: One significant advantage of term insurance is its affordability compared to other types of life insurance. This affordability is particularly beneficial for women, as they may face unique challenges such as wage gaps or career interruptions due to family responsibilities. Term insurance allows women to obtain substantial coverage at reasonable premiums, making it an attractive and accessible option for those seeking financial protection.
• Coverage for Critical Illnesses: Many term insurance plans offer optional riders or add-ons that cover critical illnesses. Since women are susceptible to certain health conditions unique to their gender, such as breast cancer, cervical cancer, or ovarian disorders, having critical illness coverage within a term insurance policy is highly beneficial. This feature provides financial support during treatment, recovery, and rehabilitation, allowing women to focus on their health without worrying about the associated expenses.
• Customisable Options: Term insurance offers flexibility and customisation options to meet the diverse needs of women. Insurance providers understand that each individual has different priorities and financial goals. Therefore, term insurance policies can be tailored to include specific features or riders, such as maternity benefits, premium waivers during pregnancy, or child education benefits. These customisable options ensure that women can align their insurance coverage with their unique circumstances, providing them with a personalised and comprehensive financial safety net.
• Adequate Coverage: Determine the amount of coverage you require based on your financial obligations, such as loans, mortgages, or dependents. Consider factors like outstanding debts, future education expenses, and the financial well-being of your loved ones.
• Reputation and Claim Settlement Ratio: Research insurance providers' reputations and track records. Look for companies with a strong claim settlement ratio, which indicates their reliability in processing and settling claims promptly.

The MWPA - Married Women Property Act 1874 was introduced to cater to the legal disabilities of married women with respect to property rights. Prior to the introduction of this act, the husband automatically held rights to a woman’s property after their marriage. The introduction of this law was an endeavour towards legally empowering women by offering them legal, financial, and real estate-based equalities and rights independent of their husbands.

In terms of term insurance plans, purchasing a plan under the MWPA Act ensures that only the wife and the children of the policyholder are handed over the sum assured as nominees. This shields the sum assured from being passed over to cover any debts or to any creditors.

If you are planning to purchase a term insurance plan under the MWPA, here are some key points to keep in mind:

• If you’re unmarried when purchasing the policy, this feature isn’t available to you.
• The MWPA feature cannot be added after the plan is issued.
• This feature has no extra premiums; your premiums will stay the same.
• Once you buy a policy under the MWP Act, you cannot change the nominee or adjust the percentage allocation among nominees.
• Parents or siblings cannot be nominees under this act.
• You can have multiple plans under the MWPA, but each plan must be registered separately under the Act

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Conclusion

Term insurance plans are a primary financial requirement considering how they safeguard a family’s finances after the passing away of a policyholder against affordable premiums. In the case of women policyholders, the premiums are even cheaper. Now, irrespective of whether they are salaried individuals or entrepreneurs with a fixed source of income or a homemaker with no specific earnings, their HLV makes it crucial to have a financial replacement amount in place in the event of their passing away. The amount so gained can be used to further facilitate the family’s smooth transition in the case of their unfortunate absence.