Guardians of the Home: Importance of Buying Life Insurance for Homemakers

In this article, we aim to debunk common misconceptions surrounding life insurance and shed light on its significance for homemakers. Contrary to popular belief, the benefits of life insurance are not exclusive to those who contribute financially to the household. Homemakers, who play a pivotal role in maintaining the family's well-being, also require adequate protection.

This article explains why investing in a life insurance plan is imperative for anyone responsible for supporting a family, irrespective of their financial contribution.

[Also Read: How to Choose the Best Term Insurance Plan in India?]

Why Is Life Insurance Essential for Housewives/Homemakers?

Homemakers, often referred to as stay-at-home moms and housewives, fulfil a vital role in nurturing their families and maintaining household affairs. Despite lacking traditional 9-5 employment, they dedicate themselves tirelessly, often working well over 12 hours daily without rest and recognition.

Their responsibilities include many tasks, from managing household chores to providing educational support for children, all while meticulously overseeing the family budget. Despite the profound significance of their contributions, their efforts frequently go unacknowledged or undervalued.

However, the unforeseen loss of a homemaker not only leaves an emotional void but can also impose significant financial strain. Assessing the economic value of their services underscores the necessity of a life insurance plan tailored to their needs.

In their absence, the expenses incurred in hiring full-time assistance to fulfil their responsibilities, including household upkeep and childcare, can escalate rapidly, increasing financial burdens. Some insurers have started offering specific "Housewife Term Insurance Plans" to ensure financial support to the family in case of an unfortunate event.

Families can mitigate the financial repercussions of their absence by securing adequate life insurance coverage for homemakers. Such coverage provides a crucial safety net, reducing the strain of additional expenses and enabling families to navigate these challenging circumstances with greater financial stability.

How to Calculate Human Life Value for Term Insurance for Women?

Determining the Human Life Value (HLV) for homemakers in terms of term insurance is complex and subjective. It's challenging to pinpoint an exact HLV due to the diverse roles, lifestyles, and family dynamics involved.

To calculate HLV, it's essential to assess the various responsibilities undertaken by the housewife and the potential salaries associated with each role. For example, if the housewife fulfils duties such as cooking, childcare, housekeeping, and driving, the wages that would typically be paid to individuals performing these tasks contribute to her HLV.

Essentially, HLV for homemakers depends on evaluating the invaluable contributions they make to their families, including their multifaceted roles and responsibilities. The insurers may also consider health and lifestyle habits and educational qualifications when calculating HLV.

[Also Read: 4 Ways to Calculate Coverage of Your Term Life Insurance]

What Benefits Does a Life Insurance Plan Provide for Housewives/Homemakers?

1. Affordable Maximum Coverage:

A term insurance plan can offer extensive coverage at a reasonable premium, focusing solely on insurance without additional benefits. Furthermore, many insurance companies incentivise women to invest in life insurance by offering lower premiums compared to men.

2. Tailored Plans:

Certain insurance companies have crafted life insurance plans specifically for women, including money-back, endowment, ULIP, or pension plans tailored to their diverse needs, whether they are single parents, professionals, or homemakers.

3. Financial Empowerment:

The maturity proceeds from a life insurance plan can grant financial independence during the homemaker's later years. This independence reduces reliance on the primary breadwinner or children for living expenses, medical costs, or other needs. With adequate coverage, she can also contribute to joint financial objectives in retirement or assist children in achieving their goals with the proceeds received.

[Also Read: 9 Essential Things to Consider Before Buying a Term Insurance Plan]

4. Customised Riders:

In addition to standard riders and add-ons available with life insurance policies, women-centric options are also available. Given that studies indicate women are more susceptible to certain illnesses, such as cancer, incorporating critical illness riders into a term insurance policy can provide invaluable support during challenging times.

5. Peace of Mind:

The security and well-being of the family are paramount for any woman. Knowing that her loved ones are financially protected in her absence brings immense peace of mind. Maturity benefits or death benefits can be used to settle outstanding loans or fund children's education, further easing concerns.

6. Benefits for Working Spouses:

Life insurance isn't exclusive to homemakers; working spouses can also benefit from it. It serves as an additional financial instrument and offers tax benefits under various sections of the Income Tax Act of 1961.

7. Determining Coverage:

Homemakers face limitations in accessing term life insurance due to income verification requirements. However, some insurers offer limited coverage term life insurance tailored for them. Insurance experts suggest coverage equivalent to 25% to 30% of the working spouse's coverage is typically sufficient.

[Also Read: Secure Your Future with Life Stage Benefit in Term Insurance]

8. Single Mother's Need:

Single mothers must secure themselves with life insurance to ensure the financial well-being of their children in the event of their survival or demise.

9. Single Woman's Consideration:

Even single women without dependents can benefit from life insurance. It serves as a means to accumulate savings for retirement or to settle existing debts. Additionally, the death benefit can support family members in clearing liabilities or meeting financial needs.

Conclusion:

Given the indispensable role homemakers play in household management, investing in a life insurance policy with adequate coverage is prudent. Although it cannot replace the emotional loss, life insurance significantly alleviates financial burdens. Thoroughly researching insurers and policy terms ensures informed decision-making, offering enhanced value for premiums paid.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.