Does An Indian Woman Have Adequate Life Cover to Financially Secure Her Future?

For women, financial security is crucial since they often juggle both personal and professional responsibilities.

Mortality protection gap among women 

Source: iStock

Life can be wonderfully unpredictable, but it can also bring unexpected challenges. A sudden illness, accident, or untimely demise can take a heavy toll on a family’s financial situation. For women, ensuring financial security is even more crucial, given that they often juggle both personal and professional responsibilities. Yet, surprisingly, most women – whether they’re breadwinners or homemakers – remain underinsured, which can put their family’s financial future at serious risk.

According to Swiss Re’s 2020 data, the global Mortality Protection Gap (MPG) is notably high in India, with a deficit of around 83% in financial protection. This gap means that if a family needs term insurance coverage of ₹100, they are covered for only about ₹17.

So, why is adequate life coverage for women a big deal? And what can we do to bridge this gap? Let’s break it down.

Mortality Protection Gap Among Women

According to a report by the National Insurance Academy (NIA), the MPG in the 26-35 age group is over 90%. This means a massive part of this population is either uninsured or underinsured. And it’s not just about formal jobs – homemakers and non-salaried women often don’t feel life insurance is relevant for them, missing the point that their role is as essential as any earning member’s.

In India’s traditional family setup, financial protection has usually been seen as a man’s responsibility. But that idea doesn’t fit today’s reality. Women are proud co-breadwinners, entrepreneurs, and also the ones holding things together at home.

In dual-income households, both partners' contributions keep the family’s lifestyle stable and help achieve goals like quality education for the kids and a comfortable retirement. Losing one income, whether primary or secondary, due to the untimely death of a partner can cause severe financial strain. That’s where an insurance payout steps in to help families manage expenses, settle debts, and invest in children’s education.

How Much Life Cover is Adequate?

The amount of life insurance a woman needs depends on her role in the family’s finances. Here’s a look at what might work best for different scenarios.

Homemakers

Homemakers may not have a formal salary, but their contribution is huge- from managing the household to childcare, elder care, and countless other tasks. If we estimate this contribution using the replacement cost method, a family will need ₹30,000 monthly to hire professionals for household duties. To support this amount, a life cover of around ₹60 lakhs (assuming a low-risk investment at 6% annual returns) could provide a steady monthly income of ₹30,000, keeping the family’s lifestyle steady without added financial stress.

Working Women

For women who have jobs or run businesses, calculating life cover is more straightforward. Ideally, life cover should be 10-12 times the annual income. For instance, if a woman earns ₹1,00,000 a month (₹12,00,000 annually), a term plan of ₹1.2 crore would ensure her family’s financial security if anything were to happen to her.

One flexible term plan that can meet the needs of modern women, whether working or homemakers, is HDFC Life Click 2 Protect Super. Here’s what it offers to help women secure their family’s future:

• Benefit from return of premium in case of survival until maturity.

• Extra payout if an accidental death occurs during the policy term.

• Waiver of premium on diagnosis of critical illness.

• Financially protects parents or grandparents as well.

But Is It Affordable?

A big worry with term insurance is the cost. But term insurance is surprisingly affordable, especially if you buy it early. For instance, with a relatively small monthly commitment, equivalent to what you might spend on a few coffee outings or a casual dinner, you could secure a substantial term plan. This coverage ensures that your family has financial support in case of any unfortunate events.

Closing the mortality protection gap and choosing the right policy can help a woman achieve financial independence, allowing them and their loved ones to face the future with confidence and peace of mind.