Out of 100 term insurance policies, only 8% had been purchased by women. The number is only marginally better in the case of health insurance. Out of 100 health insurance policies, only 12% of policies had been purchased by women for themselves and their dependents, as per estimates provided by PolicyBazaar.
The huge discrepancy in numbers is not surprising. Even though women are now earning members of a family, their income is still seen as a 'surplus' income. "The husband is seen as the main provider for the family while the wife's income is used for supplementary expenses like holidays. This mindset is reflected in the queries of purchase of term life insurance where over 90% of our enquiries are for males,'' says Santosh Agarwal, Head of Life Insurance, Policybazaar.
"Women need to realise that there is a value attached to their earnings and that value should be protected,'' adds Agarwal.
Ironically, most Indian women 'choose' to be damsels in distress, especially financially as they refuse to take charge of their money. They prefer to be dependent on males around them to take care of their finances. This is just one of many mistakes that most women make when it comes to managing their money.
By and large, women are risk-averse and prefer to play it safe. "Most women I have interacted with are not financially aware of the options available for making investments. Thus they largely end up mistaking traditional ways of investing like bank fixed deposits (FD) as the ultimate nirvana! Another thing which by default finds a place in their investments is gold. Both these need to change for sure,'' says Lakshmi Iyer, CIO (debt) & head – products, Kotak Mutual Fund.
"Women often take decisions based on emotional factors,'' says Chitra Iyer, COO, HappynessFactory. One middle-aged woman wanted to buy land to build a house for her mother despite the fact that her aged father had already been to hospital about three to four times, depleting the family's savings. The planner explained that instead of the house, savings and investments would be more useful to her mother.
"Today, sudden circumstances like death or divorce, often force women to take sole responsibility for children or parents. In such situations, your investments will come to your rescue,'' says Anjali Malhotra, chief customer, marketing & digital officer, Aviva India.
Women claim that they do not understand finances. We spoke to experts for their opinion on the most suitable financial strategy for women depending on their financial status:
1. Economically independent women: "Planning for self is as important as planning for dependents. As they say - save for the rainy day. Hence would be useful if such women get into a disciplined investment mode like SIP,'' says Lakshmi Iyer.
The economically independent woman too needs to be covered for health risks. "But if she does not have anybody depending on her, she doesn't need a life insurance,'' says Chitra Iyer.
2. Breadwinners who have people dependent on them: "It is very important for such women to have goal-linked investments - be it for child's education or for the well-being of parents etc. A financial investment comprising equity plus fixed income in line with the intended goals would be the optimal way to plan this out,'' says Lakshmi Iyer.
In such cases, a health insurance for not just self but also for all dependent persons is a must. They should also get a life cover with a term insurance plan. "There are online tools on insurance websites that help you decide how much cover is essential for you. In fact, investing in a simple term insurance plan is a good idea to ensure financial continuity,'' says Malhotra. She further adds "Taking a pension plan will help to provide a steady income post retirement.''
3. Dependent women: "This set of women need to participate in the financial decision-making of their investments just the way they are deft home-makers. It is equally important for them to be aware of wealth creation avenues available within financial asset classes and be active in looking out for 'bargains' for their own portfolio,'' says Lakshmi Iyer.
Most housewives are frugal and end up saving money even from the amount that is given to them for running the house. "Housewives who are not earning can start a SIP,'' says Chitra Iyer.
All women, irrespective of financial status, should ensure they have adequate health cover. "Women need a cover for cancer as it is far more prevalent among women than men,'' says Agarwal.
"Over the years, we have seen a common mistake among investors is to opt for a particular plan or product simply because others are doing so. A smart investor is one who would always ensure that the risk is distributed over a variety of instruments,'' says Malhotra.
Lastly, every woman should keep money in the bank that will take of monthly expenses for three to six months at least.
Damsel in distress:
1. Most housewives are frugal and end up saving money from the amount given to them for running the house and they should start a SIP
2. Even now, an earning woman's money is seen as surplus income for the family
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