What is term insurance?
Term insurance [2] is the simplest form of life insurance, which is designed to financially cushion the life assured’s family in unforeseen crises. Here, against premiums paid for a stipulated period, a sum assured is paid as a death benefit to the nominee if the life assured dies within the policy term.
How Term Insurance Empowers Women?
A term insurance ensures a lump-sum or periodic death benefit payment to the life assured’s nominee(s) at the event of the unforeseen, which may help them sail through the crises. Here’s a glance at the role of term insurance in empowering women financially.
Safeguarding the loved ones:
Financially securing the parents, providing monetary support to the spouse, protecting the child’s future—a term plan may enable a woman at every stage of life to safeguard her loved ones when she’s not there.
Adding to the family income:
A term plan may allow a woman to contribute to the family income through the tax savings generated. Moreover, if there is an unfortunate demise of life assured, the death benefit may help the family sustain through the crisis and build a corpus. Even the spouse can attempt empowering women through term plan if the wife is a homemaker while saving on taxes.
Repaying debts and loans:
Purchasing a term plan with coverage that includes the amounts of loans or debts, if any, a woman may save her family from financial burdens in her absence.
Creating a corpus at an affordable premium:
A term insurance may empower a woman to create a financial shield for her family against unforeseen troubles at an affordable cost. Available at a lower premium compared to other life insurance plans, these plans may be accessed by women from different income groups.
What are the benefits of term life insurance for women?
Understanding the role of a term plan in women’s financial empowerment may be easier when you have clarity about its benefits. Here goes the list:
Affordability
[3]: Term life insurances pay a death benefit only if the life assured dies within the policy term. Because of this structure, these plans offer coverage at lower premiums compared to other insurances. Term insurances are even cheaper for women as they have high life expectancy and lesser health risk compared to men. Thus, it may seem affordable to women across income groups.
Flexibility
[2] : Financial security for women with a term plan may be enhanced at different stages of their lives through the flexible coverage option. Through this benefit, a woman can increase the coverage amount, adapting to evolving life stages. Suppose a single woman purchases a term plan. Eventually, if she gets married or becomes a mother, the policy lets her alter the coverage accordingly, which may empower her to enhance financial security for her family.
Financial protection:
Empowering women financially with a term plan may be possible, as it enables them to create a monetary cushion for their family to protect them from unforeseen struggles. The death benefit paid to the nominee forms the financial security layer for her loved ones in her absence.
Rider benefits
[2] : (H3) Term insurance may help women achieve financial independence even when they are critically or terminally ill or are permanently disabled due to any accident or disease. These plans offer
optional riders with nominal additional premium that provide enhanced coverage for women-specific cancers or autoimmune diseases and an income stream or waiver of premium for disability support.
Repayment of debts:
Financial empowerment for women through term insurance can also be attained if the coverage includes the loan or debt amounts If you have taken a car loan or a house loan, in case of uncertain circumstances the burden of repaying this debt will fall on your family. To avoid this, you can purchase a term plan equivalent to your loan amount or greater than it and ensure the future of your family is secure.
Tax savings
[2]:
Relying on term insurance for women’s financial empowerment may also seem worthy because of the tax benefits it brings along. Annual premium payments for these policies offer tax exemptions under section 80C of the Income Tax Act 1961 (under old tax regime). The death benefit paid is also tax-free under section 10 (10D).
Steps to choose the right term plan for women
Term insurances empowering women financially may work best when the right plan is chosen. Here’s a guide to do it.
- You can start with calculating the amount needed to financially secure your family in your absence. It would depend on your age, number of dependents, marital status, income, and life goals.
- The policy tenure may be decided by focusing on the period or the life stage that requires financial protection majorly.
- From the available plans, you may now choose the one that aligns with your goals, target corpus, preferred tenure, and affordability.
- A careful review of riders available may help you choose the ones that would cater to your needs.
- Lastly, before you purchase the chosen plan, checking the credibility of the insurer through the claim settlement ratio may be a worthy step.
Conclusion
The pan-India survey[1]says 40% of homemakers are now actively participating in decisions regarding the purchase of term insurances. It may be considered a clear hint of financial empowerment for women through term insurance.
FAQs
How does term insurance empower women financially?
A term insurance policy may empower women financially by letting them safeguard the family from unforeseen struggles if they die an untimely death.
Why do women need term insurance?
Women need term insurance to create a financial backup for their loved ones in their absence.
Can I buy term insurance if I have pre-existing health conditions?
Yes, you can buy term insurance if you have pre-existing health conditions but at a higher premium.
What should be the ideal term insurance coverage for women?
An ideal term insurance coverage for women is the amount that aligns with her need, income, and affordability.
Are there any tax benefits of term plans for women?
Yes, term plans for women offer tax benefits under sections 80C (under old tax regime) and 10(10D) of the Income Tax Act 1961.
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