The transience of life applies equally to each of us. However, for decades, not everyone has had the same means of securing their future financially. The case in point here is the eligibility of housewives to obtain an independent term insurance policy for themselves. For decades, a person’s economic contribution has been tied solely to their financial output. This is perhaps the reason why the contribution of housewives has been largely underestimated for a very long time. This notion also played a role in their inability to opt for a stand-alone term insurance policy until recently.
Sajja Praveen Chowdary, Business Manager – Term Life Insurance, Policybazaar.com says, “With the recent launch of independent term insurance plans for housewives, a lot has changed. Now they can buy this plan regardless of their spouse’s policy or income status.This launched by insurance companies like Max Life, Tata AIA, IndiaFirst Life Insurance and HDFC Life marks a new dawn in the country’s financial protection landscape, in especially for women. With increased accessibility to insurance, housewives can lay their own safety net for their dependents without being dependent on their spouse. This is why it is imperative for every homemaker to secure their future and exercise better control over its financial protection.
Even after being financially empowered, women often do not take charge of their financial planning. A recent Women Investors Network survey found that about 48% of women depend on male relatives for investment decisions. This dependence tends to be higher in the case of housewives. Term insurance is as much a necessity for a housewife as it is for any time-saving family member. However, until now, they depended on their spouse to buy one, that too under certain conditions.
Other than that, they would only be covered up to 50% of the sum insured and the income multiplier would depend on the annual income of the spouse. Suppose if the annual income was Rs 5 lakh and the income multiplier is 15 times the annual income, then the husband would be entitled to cover of Rs 75 lakhs. Now if we assume he takes a cover of Rs 50 lakhs which leaves the woman with a cover of Rs 25 lakhs. And if we assume that the husband ends up taking a cover of Rs 75 lakh, then the wife will not be eligible for any cover. The rules of the policy were mainly decided by the earning spouse’s income and choice of coverage. So even though the housewife had a policy, there was little under her control. With this plan, that dependency has been eliminated.
This independent policy is available to housewives in the age bracket of 18 to 50 years. To ensure higher adoption, the plan has been designed in an inclusive and accessible manner. There are two basic conditions which must be met by the policyholder – the household income must be at least Rs 5 lakh per year and the housewife must be a graduate. Some policies also require the housewife to be the 10th or 12th pass as an eligibility criteria. Prior reliance on spousal income or policy has been completely ruled out.
Although a housewife’s contribution is not tangible, she is still an important part of the family’s financial infrastructure. And so, it is important that she also has fair access to a term insurance policy. Women constitute 49% of the total population of India, but only 16-20% of them are part of the labor force. This leaves a fairly large share of the female population. They also form a vital pillar of the economy through unpaid work and care and therefore their absence has a greater impact on finances. Household chores and care of family members account for around 39% of GDP according to UN Women data. Last year, the Supreme Court also pointed out that the common notion that housewives do not contribute to the economy is problematic and must be overcome. The unfortunate death of a housewife will lead to a restricted choice of professional roles for the husband, or may even force the family to relocate or hire paid child care. All of these items make up a significant portion of a household’s expenses. Although nothing can compensate for the loss of his life, at least his dependents and their future can be financially secured.
This change comes at a time when the pandemic continues to be an imminent threat to the health and lives of millions of people. This policy makes it possible to quantify the relevance of the socio-economic contribution of people in the household. It is also a huge step forward in the journey of financial inclusion, aside from the long-awaited recognition of unpaid work and care. However, this change will only be successful if more women realize the need for term insurance and take charge of their financial decisions.