Sangeeta (30) and Kiran (33) have a three-year old son named Aryan. Kiran works in a Financial Institution and holds a senior job with excellent remuneration. Sangeeta is a homemaker. As a young family, Kiran and Sangeeta have big plans for the future. They also have some loans, which are paid in installments every month.
These loans are –
- Home Loan – for a period of 20 years
- Personal Loan – for a period of 10 years
- Vehicular Loan – for a period of 5 years
This does not include their daily expenses, including entertainment. Considering all this, Kiran has been putting off purchasing an Insurance Policy that he wants to use as a safeguard against the large loans.
Easy accessibility to loans has ensured that families can afford to purchase more expensive items with ease, and pay off their loans (with interest, of course) in periodical installments, over a period of few months or a few years.
Now imagine the possibility that Kiran suffers a heart problem and has to be hospitalized. After about four days in the hospital he succumbs to a heart failure and passes away. He had still not purchased that Policy he was planning to.
Due to this negligence, the only remuneration his family will get are the hospitalization fees, thanks to the Mediclaim policy his company had taken on his behalf.
His family now not only has to grapple with this emotional loss but also the burden of repaying loans, getting along with daily expenses, not to mention incidental medical expenses.
Easy accessibility to loans has lured us into purchasing luxury products, thereby increasing our own liability. This reduces our cash reserves and insuring our life, health or property assumes low priority.
Most families, today, treat insurance as a tax saving tool, purchasing only the amount of insurance required to save on annual taxes. In addition, most people do not take the trouble to read the finer print, or understand their needs before purchasing any insurance policy, often resulting in a wrong decision.
Insurance Plans For Women
As women, most of us are least interested in securing our own selves, often preferring to leave this planning to our husbands or fathers. Whether it is life, health or property, as women, we tend to rely on others to make these judgments for us. While most men take planning their investments seriously, there are others who, like Kiran, do take a lighter attitude to financial security.
As Ms. Gayathri Krishnan of Bangalore says, “Being a salaried employee, I get a certain amount of protection in terms of Accidental Insurance or Mediclaim from my company. However, I have no specifics as to what insurance I have personally. My father had bought something for me. I do not have the understanding of different kinds of policies.”
Mr. Vijay Swaminathan, Senior Scientist, BASF, outlines his plans,stating, “As a husband and son, I would buy a large term insurance dividing the benefits between my wife and mother accordingly. A Mediclaim policy covering my entire family would form an essential part of my portfolio.”
“I would probably invest in a ULIP Plan for a long duration and plan it where I, or my nominees, get the returns at old age. After that, if I have reserve cash, I would take a property insurance thereby sealing the safety net I have built around myself and my family.”
Unlike Mr. Swaminathan’s case, there are many, especially salaried employees, including women, who rely only on the insurance cover provided by their companies. But what happens to women who, like Sangeeta, are home makers with no mode of regular income?
The market, today, is flooded by Insurance Companies floating various kinds of Insurance Plans. What is required is our own understanding of what we need. Let’s take a brief look at what these plans do.
Keep in mind that insurance is a tool that you can utilise to gain maximum benefits. Insurance must be purchased keeping in mind aspects like
· Covering liabilities
· Securing a good future
· Regular income after retirement
· Medical aid
Lets look at each one in more detail.
- Covering Liabilities
Big loans in the form of home loans, personal loans, etc., are usually paid off in small regular installments over a number of months of years. These loans need to be secured in a way where they can be paid off with ease, in case of any eventuality.
You can do this by taking a pure Term Insurance for the same amount as the loan. Term Insurance is the purest and the cheapest form of insurance, wherein there are no returns on maturity. The main advantage of this form of Insurance is the large cover available at a very nominal premium.
- Securing a Good Future
Endowment Plans are a good way to ensure a certain amount of return after a specific number of years. This form of insurance comes in many forms. There are plans in which a percentage of returns are handed out every 4-5 years, the last installment being the last year of the Policy.
There are also plans in which the entire sum is given only at maturity with the added bonuses. Certain Unit-linked plans with capital guarantee are also a good way to ensure returns on investment. These plans, however, are a little expensive so it is necessary to understand the exact way in which these plans function.
Children Plans also go a long way in ensuring a secure future for your child. These plans function in a way wherein periodic payments are made out during the term of the policy to meet various expenses. Also in case of any eventuality, this type of plan typically steps in to fulfill the financial part pertaining to education and marriage.
- Regular Income After Retirement
While in a job / business, the inflow of funds is quite regular. Post retirement, this regular inflow stops. For a home-maker, though, this becomes a matter of dependency on the husband / father. A pure Pension Plan can provide the pensioner with a regular annual income.
While a woman with a regular income or job can apply for an insurance of any amount (insurable interest), women with no regular income may get only a minimum amount of insurance as per guidelines.
- Medical Insurance
Medical Insurance is available for individuals as well as an entire family. It is a good idea to have Medical Insurance plan covering the entire family. This form of insurance comes in handy in case of major surgeries or hospitalization.
Today, options like cashless surgeries are easily available, wherein the life assured need not have to pay at all, and all payments are handled by the Insurance Company directly.
Whether it is life, health or property, as women, we tend to rely on others to make these judgments for us. It’s time Indian women woke up and actively took an active interest in making their own financial decisions. Insurance is just one tool to secure a financially happy future for ourselves and our loved ones.
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