Why Life Insurance is Important for Homemakers
October 5, 2021 Mutual Fund
We generally think of life insurance as a way to indemnify the life of the sole breadwinner so that the family may not have to face financial difficulties in case of their demise. However, if you have understood the importance of insurance well, you might have considered purchasing life insurance for the other members of your family too. Many of us have probably bought a child insurance plan to secure our child’s future.
But, most of us are still unsure if the homemaker requires a life insurance plan. In this article, let’s clear the major misconceptions about life insurance and understand that the benefits need not be limited only to the earning members of the family. We will discuss the reasons why anyone who has a family to support, financially or otherwise, should buy a life insurance plan.
Why do homemakers need a life insurance plan?
The homemakers, in most cases stay-at-home moms and housewives, play an equally important role in caring for the entire family and managing the household. Sure, they do not have a 9-5 job, but they work tirelessly for more than 12 hours a day without any leaves or holidays. They take care of the household chores, tutor their children, and manage the household monthly budget. Though they do these chores out of love, their services are either undervalued, unrewarded, or go unnoticed. However, her unfortunate demise will not just put you in a state of an emotional void, but is likely to pinch your pocket.
If you calculate the economic value of her services, you will realise the life insurance plan is all the more necessary for homemakers. In her absence, you will have to hire a full-time house help who can do all the chores and take care of the children and elders. These extra expenses can create additional financial stress. However, if the homemaker is covered with life insurance coverage, the money can help you manage these expenses.
What benefits do a life insurance plan offer homemakers?
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Maximum coverage at an affordable premium:
A term insurance plan can offer maximum coverage at an affordable premium as it is a pure form of insurance that generally does not come with other benefits. Moreover, in order to encourage women to buy life insurance, many insurance companies have started offering lower premiums for females compared to their male counterparts.
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Special Plans:
Some insurance companies have designed life insurance plans specifically for women. Such special plans are typically money-back plans, endowment plans, ULIP plans, or pension plans that can cater to the specific needs of women-single parents, professionals, as well as homemakers.
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Financial Independence:
The maturity amount of the life insurance plan can help her be financially independent in her silver years. She will not be financially dependent on the bread winner or children for living, medical, or any other expenses. If sufficient coverage is taken, she can also help you meet your joint financial goals in the retirement phase or help children meet their goals with the amount she receives.
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Riders and Add-ons:
Apart from the regular riders and add-ons available to a life insurance policy, you can choose women-centric riders/add-ons. As per studies, women are more prone to cancer than their male counterparts. Therefore, it makes sense to buy the critical illnesses rider along with a term insurance policy for women. The life insurance plan with such extra benefits can be very helpful in challenging times.
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Peace of mind:
Since the biggest priority for any woman is the safety and security of her family, knowing that her beloved family is financially secured in her absence will give her peace of mind. The amount received after the maturity of the plan or the death benefit can be used to pay off unpaid loans or for the education of children.
Apart from the benefits stated above to a homemaker, the working spouse can benefit from purchasing life insurance as it can become an additional financial instrument that can help you in a long run. Furthermore, you get tax benefits under sections 80C (on premiums paid), 80D (on critical illness cover), and 10(10D) (on death benefit), of the Income Tax Act, 1961.
How much coverage should a homemaker have?
The term life insurance policy options are limited to homemakers as most life insurance companies ask for income proof to avail of a term life insurance plan. However, there are a few insurers that offer limited coverage term life insurance to homemakers.
You can choose from a wide range of ULIP or guaranteed-return life insurance plans such as, pension plans, endowment plans, money-back plans, etc. According to insurance experts, the life insurance coverage of 25% to 30% of the working spouse’s coverage is usually sufficient for homemakers.
Does a single mother need a life insurance plan?
If you are a single mother, you must cover yourself with a life insurance plan as the survival or death benefit will financially secure your child’s future.
Does a single woman with no dependents need a life insurance plan?
If you are a single woman, you might think you don’t need life insurance as you do not have a spouse or children. However, a life insurance policy can help save a sufficient amount for yourself that can be useful post retirement. You can also use that amount to pay off any existing loans. Furthermore, in case of your demise, your parents or any other family member can use the death benefit to clear your liabilities or the amount might help them to fulfil their financial needs.
Conclusion:
Since women in their capacity as homemakers play an equally important role in managing the house, it is advisable to buy a life insurance policy with adequate coverage for her. Although the emotional damage is irreversible and no one can take her place, having life insurance can most definitely help reduce the financial stress. Do your research and choose the insurer that offers more value for the premium you pay. Before buying the policy, make sure you thoroughly read the policy document and terms and conditions; this will help you make an informed decision.
This article first appeared on PersonalFN here
