Top 5 Reasons Why Women Need Life Insurance

Life insurance is a product that is typically sold to the primary earning members or the sole breadwinners in a family. This is because the remaining members of the family unit depend on the earning member or members for their financial needs. So, if anything untoward were to happen to these breadwinners, the surviving members of the family may be financially distressed.

A life insurance plan can help the family get through these tough times without too much of a financial burden. The sum assured under the plan will be paid out to the nominee by the insurer, and this benefit can help take care of the regular needs as well as the life goals of the family.

Decades ago, the earning members in a family were primarily men. But today, the scenario has changed significantly. In many households, women are also prime earning members of the family. Then, there are many women, like single mothers, who may be the sole breadwinners in their households.

So, as more women continue to enter the workforce, the importance of life insurance for women has also increased. Let us take a closer look at why a life cover is an essential part of financial planning for women in India.

Women today contribute to their households in many ways. Some, like working women, add to the family's income. Others, who may be homemakers, take care of the children and keep the wheels turning at home. The contributions of all these women are undoubtedly significant. In addition to the emotional loss that comes with losing a family member, the loss of the women in a household can also lead to additional financial burden.

For instance, in case a working woman passes away, her family will face the stress that comes with the loss of income. And in case of a homemaker's demise, her family may have to resort to external assistance to take care of the jobs the deceased woman handled on a daily basis, like cooking, home maintenance and more. So, in either case, the surviving members of the family will also be financially affected.

Needless to say, a life insurance plan can help soften the blow significantly. Here are some of the top reasons that explain why women need to include life insurance as an essential part of their financial planning.

Many life insurance plans offer more than just a life cover. There are savings plans, which give guaranteed³ returns in the form of a lump sum payout, periodic payouts, or a combination of the two. Then, there are Unit Linked Insurance Plans (ULIPs) that give market-linked returns at the time of maturity.

These payouts are made if the policyholder survives the policy term. So, by purchasing a life cover, women who live past the maturity date get these financial benefits from their life insurance plans. These payouts can help women policyholders achieve financial independence, by making them less dependent on other individuals for their financial needs.

One of the foremost reasons women should get a life insurance plan is to protect their loved ones financially, in case something untoward happens to them. Term insurance, in particular, can help you protect your loved ones with a significant cover that is cost-effective too. This is because term insurance is the most affordable kind of life insurance.

If you are a woman who is looking for a financial product to help secure your family's future in your absence, term plans fit the bill perfectly. In case something untoward happens to you, the sum assured under the plan will be paid out to your nominee. This acts as a safety net for your loved ones and helps them meet their everyday needs and fulfil their life goals as planned.

As a woman, you may have your own personal or familial goals to take care of. You may want to buy a new house, or you may want to save up for your child's future. You may even want to fulfil your own dreams like starting your own business venture or travelling the world. The right kind of life insurance plan can help you with these personal goals.

For instance, a child plan can help you meet the important milestones in your children's lives. You can build a corpus that is paid out to you at maturity, and you can ensure that the policy tenure aligns with your child's college-going phase. This way, you will receive the payouts from your plan just in time to pay for your child's higher education.

Although it may not seem this way when things are going well, an emergency could occur at any point in time. There may be a medical emergency in your family, your home may be unexpectedly damaged due to a natural disaster, or your vehicle may need a major repair. In such situations, an emergency fund may be your first go-to solution.

But if you don't have an emergency fund, or if your financial emergency cannot be covered by that fund alone, you can rely on your life insurance plan. Most life insurance policies allow you to take a loan against the plan, up to a specified percentage of the policy's surrender value. This can help you take care of the emergencies without paying for anything out of pocket.

A life insurance plan can also help women tackle medical expenses when the need arises. Certain types of critical illnesses may be specific to women, like breast cancers, cervical cancers and uterine cancers. Women may also be particularly affected by arthritis or osteoporosis as they grow older.

Paying for the treatment of these illnesses out of pocket can be financially challenging. However, a life insurance plan makes it easier to bear these expenses, because women can make use of specific riders like a critical illness rider, a surgical care rider or a hospital care rider to cushion the effect of these medical expenses. The rider benefits include coverage for hospitalisation and/or surgery, as the case may be.

This should give you a better idea of why life insurance is an important financial planning tool for women from all walks of life. Whether you are a single mother, a working woman or a single woman with any family dependents, it is always a good idea to get a life cover when you are young and healthy.

Along with other key necessities like an emergency fund and a health insurance plan, a life insurance policy should be one of the first things you should include in your portfolio. This way, you can enjoy all the benefits outlined above right from a young age. And you can protect your loved ones right from the word go.

As you grow older, if the number of dependents increase, or if your family's financial needs grow, you can increase your life insurance cover accordingly. For instance, you can start by getting a term insurance plan and later expand your coverage with a child plan. This is an essential part of financial planning for women.