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Personal Finance - Risk Management Is Right Up There With Other Financial Decisions
08-Mar-2017
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It’s well known that India insures poorly. A report by Swiss Re, a global reinsurance company, places the protection gap in India as the second highest in Asia. This is the gap between how much life insurance cover a person buys and how much she actually needs. Further, in the case of women, this gap is much wider.

“Among the individuals insured in India, about one-fourth are women and the protection gap is much worse,” said Kalpana Sampat, chief executive officer, Swiss Re India Branch.

So on International Women’s Day as we nudge you to be more in charge financially, we also want to draw your attention to insurance. And what better way to do that than to have women professionals from the sector give you advice on the insurance products to buy.

Life insurance

According to Sampat, anyone who earns and contributes to the household needs life insurance, women being no exception. “Insurance should be bought by anyone who earns, is in the productive age and has a family to support. This includes women and even self-employed women. But women barely constitute 30% of policy purchasers. They tend to keep family before themselves and often neglect their own protection,” she said.

A large part of this neglect has to do with the traditional mindset that men are the breadwinners of the family.

“In situations where the financial contribution made by a woman is not valued, due to a traditional mindset or because the partner earns substantially more, the woman tends to undervalue her financial worth,” explained R.M. Vishakha, chief executive officer and managing director, IndiaFirst Life Insurance Co. Ltd.

This low financial self-esteem means complete disregard for insurance. But according to Vishakha, this is slowly changing.

“There is growing awareness among working women with children to take insurance against unforeseen circumstances to ensure a financial backup for the children,”she added.

So if you are contributing to the household income, whatever be the amount, life insurance is a must. This policy will ensure that your family doesn’t face a financial setback if you are not around.

A thumb rule says, buy a cover that’s 8-10 times your annual income and the best product for life insurance is a term plan. The good news though is that women typically pay lower premiums. The rate is of a person 2-3 years younger. But if you don’t have a family to support, you can skip life insurance altogether.

Health and Wealth

But you can’t skip health insurance, not even when your employer gives you one. Unlike life insurance, health insurance is slightly more popular among women, but that could be because women get covered under group policies by their employers or under family floater health insurance policies.

“Women tend to leave most financial decisions to their spouses and health insurance is no exception. So, it’s not as if women actively buy health insurance, but most women end up getting insured under the family floater health policy that the husband buys or through the corporate plans, though the situation is changing marginally of late,” said Meena Subramanian, senior vice-president and national head, broking and corporate sales channels, SBI General Insurance Co. Ltd.

A health insurance policy is a must to ensure that a medical emergency doesn’t set your financial life back, and a cover from your employer is not enough. “It’s important to have a personal health insurance policy apart from what your employer offers, because as you shift from one employer to another, there could be a break in the policy, leaving you uninsured,” added Subramanian.

You can choose from different kinds of health insurance plans but the first product you need to have is a basic health insurance policy that will pay for hospitalization.

“Make sure it comes with fewer sub-limits. Also look for wellness and preventive programmes that insurers now build in. For a woman living in a metro, an individual policy of at least Rs7 lakh is recommended whereas in case of a floater covering two children and two adults, the sum insured should at least be Rs15 lakh,” said Jyoti Punja, deputy chief executive officer, Cigna TTK Health Insurance Co. Ltd.

You can even enhance your cover in a cost-effective manner through a top-up plan. “Most people in India are not aware of the availability of top-up covers to supplement basic health insurance covers. One can easily have health insurance of up to Rs20-30 lakh without having to shell out a huge premium,” said Malti Jaswal, chief operating officer, Health Insurance TPA of India Ltd. Read more about it at: bit.ly/2lSfwOh.

You can also consider a critical-illness policy that pays a lump sum benefit if you are diagnosed with a critical illness mentioned in the policy. “Critical illness policy has become essential in today’s world due to high incidence of ailments such as cancer, stroke and kidney failure. These policies should be a part of the insurance portfolio of all individuals, including women, and women should not restrict the policy to cover women-specific ailments only but go for a policy that covers all major ailments,”added Jaswal.

And if you are working, a personal accident cover should also be looked at.

“A personal accident policy is a must for working women as it provides financial support even in times of disruption in earnings due to accidents,” said Subramanian.

Your insurance needs don’t stop at insuring your life and health alone, you also need to insure your assets.

While everyone who has a car is covered through car insurance (third party cover is mandatory), home insurance is often neglected.

“A lot of your savings go into buying assets such as house and jewellery, so you need to insure them as well. The good thing is that in India, such covers are very reasonably priced and policies are not difficult to buy; in fact, you can buy them online also,” added Jaswal.

As you think about your financial health, you must also think about insurance. We hope you will spend some time reviewing your insurance needs.

Walking the talk

R.M. Vishakha, CEO and MD, IndiaFirst Life Insurance Co. Ltd

I have a term plan, health insurance, car insurance with add-on covers, and savings policies for retirement income

Meena Subramanian, senior VP, national head, broking and corporate sales channels, SBI General Insurance Co. Ltd

I have personal health insurance with top-up cover, critical illness policy, personal accident cover, car and home insurance

Jyoti Punja, deputy CEO, Cigna TTK Health Insurance Co Ltd

I have term policy, floater health insurance, personal accident and car insurance, critical illness cover, and traditional and investment-linked plans

Malti Jaswal, chief operating officer, Health Insurance TPA of India Ltd

I have term insurance, health insurance, personal accident cover, home and car insurance. I don’t use insurance for investments

Kalpana Sampat, CEO, Swiss Re India Branch

I have group and individual term plans, car insurance and investments. I will convert the group health policy to an individual policy on retirement

Source : LiveMint back