‘Covering Risk through Insurance for Single Women’
January 21, 2016
Way back in 1970s a Novel in Bengal made ripples in the literary circle –the story revolved around a young widow –who lost her husband at the age of 17 and was driven away by her in laws.
The heart-rending tale of this lady who fought the society fearlessly and kept her head high was jaw dropping. She had a box of jewels and she treasured that fanatically safeguarding it from greedy people, and she protected it with her life.Finally her granddaughter gets the box and donated all the pieces of jewelleries towards the cause of revolution.
Almost half a century down the line as I attempt to write on what insurance can mean to a Single Lady/mother-I am reminded of that famous novel.We have come a long way since then –Today we see phenomenal participation of women in all walks and stages of life. Parents are encouraging women to pursue higher education which helps them walk shoulder to shoulder with men today. With their growing potential and capabilities, they are managing their household and earnings for the improvement of their homes too.
According to a report by Booz & Company, a consultancy, if female employment rates matched those of men, GDP would increase by 5% in America and 9% in Japan by 2020.
Considering these facts, it seems only obvious that women need life insurance as much as men do, and more or less for the same reason - to assure a financial back up in case a medical contingency arise.
The reason to buy life insurance is more compelling if the women has dependents and is single, unmarried, divorced or widowed. It is important that women falling in the above mentioned categories should especially plan their finances more carefully in order to provide for their dependents like kids, parents or extended families they live with and so on.
Going by the Indian tradition, buying a separate life insurance policy for the woman is not considered important. However, a single mother has no option but to keep her finances ready and be insulated from any unforeseen event that may arise. This is more so, because gone are the days when people would lend willingly, and considering people have nuclear families it is more important to be financially independent and make provisions for your dependents in case of your absence due to death.
Let’s deliberate on the risks that single women/mothers should consider for coverage-
1. Risk of contingency to protect the dependents-can be parents and children.
2. Coverage against Critical Illness
3. Protection covers for normal illness /surgery-Mediclaim kind of coverage.
Apart from these, they should consider some long term saving oriented insurance products to cover needs like-
1. Child Education related corpus building
2. Retirement fund generation
What an insurance product does other than risk coverage is to inculcate a habit of compulsive saving in people –the years go on and over a period of time these products generate a sizeable amount that may not be great from return perspective but does help people to make good for big lump sum spent.
The products that I would recommend as a must have for single lady to start with would be a pure long term –Term Insurance Cover that comes very cheap and also can be bought with disability benefits in case of an unfortunate accidental event.
Ideally such a cover should never be bundled with any savings as purpose of these two products entirely different.
On the line of protection –a cover for various critical illnesses should also be considered. While such comprehensive covers may appear a little costly-I would still say that it’s worth that cost.
Most of these critical illnesses are curable with proper treatment but the treatment in best of the hospitals entail huge cost, and these costs can be taken care by your insurance policy.
Some companies have introduced standalone Cancer covers with very less premiums. I would recommend that too for a single lady.
In short one must remember in case of an unfortunate attack of a dreaded disease; medicines & treatments can save but you must have the financial backup to use those particular treatments which can cure illnesses.
The second part of Insurance related product that may be considered over a period of time are savings related, which come in various forms of ‘Traditional products’ and ‘ULIPs’. These products give benefits of risk coverage and saves some money too.
What it can do for a single lady –is to generate a healthy corpus over a period of time for various life stage based needs like-Marriage, Wealth Creation for Home purchase, Education for child, Managing old aged parents needs/self retirement fund generation etc.
With a proper certified planner-specific planning can be done around year wise needs-however key is to plan with a specialist and not an untrained friend/relative/neighbour who would have just started the career in selling or a compulsive sales situation in a financial institution.
Remember while buying there is no right or wrong company/product. Just be clear that the money you are putting must have a sensible result in the end as per your nee. Never buy in haste or under duress. You must ask questions, take time, do your own researches & finally buy only when you are convinced. One will be happy with the purchase if the person knows what he has bought & the reason behind it.
Mr. Amit Kumar Roy
Chief Distribution Officer, Aegon Life Insurance