Beyond Savings: The Importance of Term Insurance for Women’s Financial Security

Women play multiple roles in society, from professionals and entrepreneurs to homemakers and caregivers. Despite growing financial independence, life insurance policy ownership among women in India remains low. Less than 35% of all life insurance policies are sold to women, and life insurance policy penetration in India is just 2.8% of GDP.

Relying solely on savings and investments is not enough to secure a family's financial future. A term insurance policy is a crucial financial tool that provides high coverage at low premiums, ensuring that women and their families remain financially stable in case of unforeseen events.

What is term insurance

A term insurance policy is a type of life insurance that provides financial protection for a fixed term. If the policyholder passes away during this period, the nominee receives a lump-sum payout (death cover). Unlike traditional life insurance policies, term insurance does not have a maturity benefit, making it a low-cost, high-coverage financial tool.

Key benefits of term insurance for women

1. Financial security for the family

• Ensures that dependents do not face financial hardships after the policyholder's demise.
• Covers daily expenses, loan repayments, and children's education.
• Helps maintain the family's standard of living without financial distress.

For example, a Rs. 1 crore term insurance policy ensures that a working woman’s family remains financially secure even in her absence.

2. Lower premiums for women

• Women have a higher life expectancy than men, resulting in lower mortality risk.
• Due to this, insurers offer lower premiums for women compared to men for the same coverage.
• Women can get higher coverage at a lower cost, making term insurance an affordable financial tool.

For instance, a 30-year-old non-smoking woman can get a Rs. 1 crore term plan for around Rs. 8,000 per year, while a man may have to pay Rs. 9,000–10,000.

3. Protection against critical illnesses

• Many term insurance plans offer critical illness riders that cover diseases such as:
  • Breast cancer
  • Cervical cancer
  • Heart diseases
• Women-specific term insurance plans provide coverage against medical emergencies that may not be fully covered by regular health insurance.

For example, if a woman is diagnosed with breast cancer, a critical illness rider ensures she gets a lump sum payout to cover treatment costs.

4. Financial independence for single women and homemakers

• Single women can ensure financial security for aging parents or siblings.
• Homemakers, even though they do not earn, contribute significantly to household management. A term plan ensures:
  • Cost of childcare and household expenses are covered.
  • Family members do not face financial struggles in their absence.

India has nearly 70 million single women, many of whom have dependents. Term insurance provides a safety net for them.

5. Tax benefits under Indian law

• Premiums paid for term insurance are tax-deductible under Section 80C of the Income Tax Act.
• The death benefit received by the nominee is tax-free under Section 10(10D).
• Additional tax benefits apply to riders like critical illness cover under Section 80D.

For instance, if a woman pays Rs. 50,000 annually for a term insurance policy, she can claim this amount as a deduction from taxable income, reducing her overall tax liability.

6. Customisable coverage with riders

Term insurance plans can be enhanced with additional riders, including:

• Accidental death cover – Higher payout in case of accidental death.
• Critical illness cover – Lump sum payout on diagnosis of serious illnesses.
• Waiver of premium – If the policyholder is diagnosed with a critical illness or permanently disabled, future premiums are waived.

7. Ideal for working women

• Women in corporate jobs, self-employment, or businesses can secure their income with term insurance.
• Helps in covering outstanding liabilities like:
  • Home loans
  • Car loans
  • Personal loans
• Prevents financial burden from falling on family members.

For example, if a working woman with a Rs. 50 lakh home loan has term insurance, her family won’t have to struggle with EMIs in her absence.

Why Indian women need term insurance now more than ever

The insurance gap is wider for women, especially in rural areas and lower-income groups, where financial security options are limited. According to IRDAI, working women remain an underserved segment in the insurance market. To bridge this gap, the ‘Bima Vahak’ initiative aims to recruit women agents to increase insurance awareness and accessibility.

With less than 35% of life insurance policies sold to women in India, term insurance can play a crucial role in financial empowerment. By opting for a term insurance or a life insurance policy, women can:

• Secure their family's financial future.
• Protect against critical illnesses with additional riders.
• Benefit from lower premiums compared to men due to higher life expectancy.
• Avail tax deductions under Sections 80C and 10(10D) of the Income Tax Act.
• Customise coverage with options like accidental death and waiver of premium riders.

With term insurance, women can achieve long-term financial independence while ensuring their loved ones remain financially secure.

Conclusion

A term insurance policy is a must-have for every woman, regardless of income level or profession. It provides financial protection, peace of mind, and long-term security for families. With lower premiums, tax benefits, and high coverage, term insurance is a smart financial choice that ensures women remain financially independent and prepared for the future.

Exploring affordable life insurance policy and term insurance plans can help secure a woman’s financial future and provide peace of mind for her family.

Note to readers: This article is part of Mint’s paid consumer connect Initiative. Mint assumes no editorial involvement or responsibility for errors, omissions, or content accuracy.

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