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Term insurance for women is a vital financial tool that helps in securing the financial future of their loved ones in their absence. It offers wide-ranging features customisable to suit individual financial needs.
When planning for financial independence, term insurance for women is significant in ensuring financial security for themselves and their loved ones. It helps reduce their family's financial burden and creates a way to accomplish their future financial goals.
Term life insurance for women helps achieve these financial objectives in a structured approach for the long term. Therefore, choosing the best term insurance for women is necessary, considering the individual financial conditions and needs.
So, here is an insight into term plans for women, their importance, features, benefits and more!
What Is Term Insurance For Women?
A term plan for women is a pure protection life cover that will provide a financial death benefit to their family in the event of their unexpected death during the policy tenure. The family can utilise the term insurance benefits to manage their routine expenses, accomplish future financial commitments, clear off debt, etc.
Term insurance provides a huge sum assured at an affordable premium. In addition, policyholders can customise the term insurance by choosing flexible features and including add-on rider# options based on their financial condition and requirements for the long term.
Insurance providers often provide term insurance for women at a discounted premium rate. The percentage differs between insurance providers, subject to their policy terms and conditions.
Why Is Term Insurance Important For Women?
Financial Security
It is imperative for every woman to have term insurance coverage for the following reasons.
- Working women - Need to secure funds for their dependent family members to help them sustain a life in their absence.
- Self-employed woman - Needs to ensure financial security to help her family get relieved from the burden of outstanding debts, loans, and other liabilities in her absence.
- Single mothers - Need to secure funds to help her children achieve their financial objectives in her absence.
- Housewives - Housewives do contribute to the family’s well-being by engaging in various responsibilities. Therefore, a term plan is of utmost importance for her family to manage the financial implications.
Financial coverage for health needs
Term plans for women provide add-on rider# covers for specific scenarios. For instance, the rider# for the critical illness benefit will provide financial support to pay for the medical treatment and hospitalisation expenses when the policyholder is diagnosed with a critical illness, such as breast cancer, cervical cancer, etc., during the policy tenure.
Plan for important life stages
As term life insurance for women offers flexible features, they can plan for the increasing financial commitments at different stages in their lives, such as when they get married, are blessed with children, etc., by increasing the sum assured and enhancing the financial coverage for securing their family.
How Term Insurance For Women Works?
Saintika, a 36-year-old IT professional, is a single woman living with her dependent parents and two children in Mumbai. She earns a handsome salary required to meet the needs of her family.
However, as she is the family's sole earning member, she needs to secure funds for her family to satisfy their financial requirements in their absence. Therefore, she purchased a ₹2 crore term insurance policy for a policy tenure of 15 years.
She chose the regular annual premium payment option and the combination of a lump sum and regular income payout option for the term plan.
In the event of her unexpected demise during the policy tenure, her family will receive the sum assured partially as a lump sum and the remaining amount as a regular income to manage their financial requirements.
Features Of A Term Insurance Policy For Women
Extensive life cover
Term insurance for women provides extensive coverage, such as ₹50 lakhs, ₹1 crore, etc., to secure finances for the financial future of their loved family members. It can help them satisfy a range of financial commitments for the long term.
Affordable premium
Term plans for women offer extensive coverage at an affordable premium. In addition, they can reduce the premium rates further by choosing a longer policy tenure and starting to invest earlier in their life. Purchasing a term insurance policy at a younger age reduces the premium rate to a great extent, considering their good health condition and reduced risk.
Add-on riders#
Term life insurance for women offers wide-ranging add-on rider# options that enhance financial coverage during specific scenarios. For example, the rider# for the waiver of premium benefit waives off paying future premiums if the policyholder is affected due to a total or permanent disability in an accident.
Riders# offer enhanced coverage during the policy period for minor and major injuries, critical illnesses, terminal illnesses, etc., during the policy period. It can help women policyholders pay for their medical expenses and reduce their family's financial burden.
Suppose the family has a history of developing a critical illness like breast cancer. In that case, women can purchase the rider# to secure finances for paying for the treatment expenses in case of the diagnosis.
Flexibility
Term insurance for women offers various flexible features.
- Premium payment options - Women policyholders can choose between regular, limited, and single premium payment options.
- Payout options - Women policyholders can choose between the lump sum, regular income, and the combination of the regular income and lump sum for the payout.
- Policy tenure - Women policyholders can choose the policy tenure based on their financial necessities.
Types Of Term Insurance Plans For Women
Level Term Insurance
The sum assured and the premium remains fixed throughout the policy tenure. It is suitable for salaried women who are the sole earning members of the family.
Increasing Term Insurance
The sum assured increases by a certain amount annually during the policy tenure. Therefore, the premium rate for such increasing term plans is higher.
Decreasing Term Insurance
The sum assured decreases by a certain amount annually during the policy tenure. The premium for a decreasing term plan is lesser than other types of term plans.
Convertible Term Insurance
A convertible term insurance policy provides the option to convert the term plan for a specific policy tenure to a whole life until death.
Term Insurance With Return Of Premium
Term insurance plans do not provide a maturity benefit. However, term insurance with the return of premium benefit provides a refund of the premium paid, subject to the policy conditions, as a maturity benefit at the end of the policy tenure.
Benefits Of Term Insurance For Women
Helps financially secure her family
With a term insurance policy, a woman can secure her family's financial future in her absence. Every woman has distinct responsibilities concerning her family. Therefore, her absence is a cause for concern and must be secured if she is employed or a housewife. A term plan with adequate coverage can secure her family to the desired extent when well-planned.
Helps create customised term insurance solutions
Women can choose to customise the term plan based on their affordability and financial requirements. They can decide on the policy tenure, premium payment option, payout option, etc., to suffice for their family's financial needs.
Benefit from discounted premium rates
Women can benefit from discounted premium rates for purchasing the term insurance policy. It will reduce the premium rate further, making it affordable for the long term.
Helps save on tax*
Under Section 80C, the annual premium paid will qualify for a tax* deduction benefit of up to ₹1.5 lakhs. Furthermore, the death payout or the maturity benefits will qualify for the tax* exemption benefit under Section 10(10D) of the Income Tax Act 1961.
Plan for retirement
Women can choose the return of premium option to receive a refund of the premium amount paid as a maturity benefit to plan for their retirement and lead an independent life.
How To Choose The Best Term Insurance For Women?
Find the sum assured - Women need to analyse their financial condition and requirements to determine the sum assured required for the term plan. The following methods can help find the right coverage for the term insurance policy.
- Human Life Value Method - The coverage required will be calculated based on the woman's income, expenses, future financial obligations, loans, and liabilities, accounting for the inflation rate in this method.
At Tata AIA, we offer the Tata AIA Life Insurance Human Life Value Calculator to determine this value.
- Expenses Method- The coverage can also be calculated based on the expenses applicable to the woman's family, such as routine utility bills, future financial commitments, etc.
- General thumb rule - If finding the coverage is challenging, the general thumb rule can be utilised to determine the coverage. The general thumb rule is to calculate the sum assured as 10 times the current annual income.
- Online term insurance calculator - Online term insurance calculator can help women determine the sum assured with the required features and add-on riders# at an affordable premium rate.
- Human Life Value Method - The coverage required will be calculated based on the woman's income, expenses, future financial obligations, loans, and liabilities, accounting for the inflation rate in this method.
Decide on the policy tenure - The policy tenure can be decided based on the financial commitments considering the woman's dependent family members.
Research and find term plans - Now that the requirements are defined, the next step is to research and find term insurance policies that will suit the individual financial requirements. It can be determined based on the features, eligibility criteria, and the applicable benefits.
Compare term insurance plans - Compare the short-listed term plans and choose a term insurance policy that can suffice for financial needs and is affordable during the long term.
Decide on the required riders# - Women should consider including the appropriate riders# to enhance the coverage. For instance, they can include the rider# for accidental death benefit if they work in an environment prone to accidents.
Determine the term insurance premium - Customise the chosen term plan by choosing the various options, such as the premium payment option, payout option, return of premium option, etc., based on the affordability and requirements and calculate the premium.
At Tata AIA, we offer the Tata AIA Life Insurance Term Insurance Calculator to help determine the premium cost. If the calculated premium cost is not affordable, the options, coverage, and policy tenure can be revised to determine the most suitable and affordable premium.
Conclusion
Term insurance for women is an indispensable financial tool for financial security. It offers several features that help women plan their life insurance investments for their family's well-being. The diverse plan options and benefits empower them to make well-informed financial decisions catering to their specific needs. Therefore, analysing the financial scenario and choosing the best term insurance for women becomes paramount for staying insured long term for safeguarding their family.
