By Tarun Mathur
A mother’s life is synonymous to running round the clock, juggling one task after the other, and efficiently shouldering all responsibilities to make her family and children secure and comfortable in all possible ways. Undoubtedly, motherhood is the most wonderful experience, but it also goes hand in hand with a lot of responsibilities. However, in the middle of endless to-do lists, financial planning often tends to take a backseat for mothers.
This Mother’s Day, you should consider purchasing adequate insurance coverage for yourself and your family to safeguard against any unforeseeable financial hardships.
1. Health insurance is highly relevant– A household practically revolves around a mother so it’s important that they ensure every step to take care of their health. Women aged 35–55 years tend to develop chronic ailments such as arthritis, diabetes, hypertension, and osteoporosis at a higher rate in comparison to men. Additionally, they are more susceptible to certain forms of critical illness, like breast and cervical cancer, etc. As a result, the treatment costs for these can potentially drain one’s finances.
Choosing a health plan with OPD or outpatient department expenses can safeguard you from costs incurred on doctor’s consultations, telemedical consultations, pharmacy bills, diagnostics, and much more.
Similarly, you can opt for a health insurance plan that rewards policyholders for staying healthy. Under this, insurers offer up to a 100% discount on the annual premium to promote the fitness and wellbeing of the policyholders. They give incentives for healthcare activities like walking 10,000 steps, going to the gym regularly, etc. during the policy year and meeting their health parameters. This discount may vary from insurer to insurer and, of course, to the extent to which the health goals are.
Likewise, as a woman, you might have unique healthcare needs, related to maternity care, reproductive health, and preventative health services. Insurance companies allow you to customise your health plan based on your needs and budget. You can also choose a modular health plan to address these needs.
2. Secure your life with term life insurance– Irrespective of whether you are a working woman or a homemaker, you must ensure to buy a term life insurance policy at the earliest possible time with suitable riders.
If you are a working mother, a term plan can be counted as a safety net for the entire family. It would protect your income and your family, including your kids, in case anything unfortunate happens.
In the event of the premature death of the policyholder, any form of disability, or even a critical illness, the pay-out of the term plans helps provide the family with funds to pay off debts (if any), take care of the children’s educational expenses, and provide them with a source of income to support their day to day needs.
The premium for term insurance is eligible for tax deductions under Section 80C of the IT Act. Additionally, the death pay-out paid to the nominee is tax-free under Section 10(10D).
As the insurance sector is constantly evolving to address the needs of every kind of consumer segment, now homemakers are also eligible to buy a term plan independently with a sum assured as high as Rs 50 lakh to Rs 1 crore. Any homemaker who is 10th or 12th pass and has a household income of Rs 5 lakhs can purchase a term policy and secure the future of her loved ones.
Moreover, considering the affordability aspect, the term plan is up to 30 percent less expensive for women because Indian females’ life expectancy is on average 2.5% higher than their male counterparts. This means the longer a person lives, the better it is for insurance companies as the risk and the probability to make a claim is lower.
3. Comprehensive motor insurance coverage- Having third-party insurance is mandatory for all car owners, but it is always recommended to opt for comprehensive motor insurance so that it covers the damage to the owner’s car as well as the third-party liabilities. Additionally, one should also opt for riders to increase their protection. Engine protection cover, personal belongings cover and 24/7 roadside assistance are a few riders that every woman driver should essentially have to enhance the coverage of their motor insurance policy.
If you’re a mom who doesn’t drive often, you can opt for a “Pay As You Drive “(PAYD) motor insurance plan. Under this policy, the policyholder has to pay the insurance premium as per the driving frequency. Either you can choose a pre-decided distance slab like 2500 km or 5500 km, according to your driving needs, or alternatively, you can also choose the other model where the policyholder can switch off their policy whenever their car isn’t being used to reduce the premium.
Wealth creation with investment-cum-insurance products
4. Unit Linked Investment Plans (ULIPs): ULIPs are a combination of insurance and investment. A certain proportion of your premium is set aside for providing life insurance for your dependents. If you are a new mom and your child’s higher education and marriage expenses are a couple of decades away, then investing in ULIPs is beneficial. Under favourable market conditions, ULIPs can give up to a 12–15% return on investment.
Additionally, ULIPs offer tax benefits for up to INR 2.5 lakh annual premiums. In case anything unfortunate happens to the policyholder, their policy will pay a total life cover or the fund value to the nominee, whichever is higher. In addition, this amount will be tax-free.
5. Guaranteed Returns Plan – If you are a mother, who has a zero-risk appetite, then investing in guaranteed return plans is an ideal option. These plans offer guaranteed returns of up to 7.5%, absolutely tax-free.
Moreover, these plans offer life insurance coverage to safeguard your dependents in the event of the insured’s sudden death. You can lock in the interest rate for approximately 45 years. These plans, too, offer tax benefits for up to Rs 5 lakh in annual premium.
Each stage of a child’s life will need a different level of financial support. Thus, planning your finances correctly can actually ease your parental workload.
-The author is co-founder and chief business officer – general insurance, Policybazaar.com. Views expressed are personal.
Disclaimer:The views expressed in this article are those of the author and do not represent the stand of this publication.
