Financial empowerment of women quite often only accounts for women in the workforce who earn a living. However, this leaves out a major segment of the population, especially in a country like India — the homemakers.

Data suggest that when it comes to making financial decisions, women still tend to take a backseat. But this difference is starkly visible in the case of homemakers, whose invaluable contribution towards home and family remains intangible and unquantifiable monetarily.

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Possibly, this was the reason that traditionally homemakers were dependent on the working spouse’s existing term insurance policy and earnings despite their substantial contribution. But as the insurance industry continues to evolve and become more inclusive, innovative policies and products are being devised to effectively cater to every segment, including homemakers.

Taking cognisance of this gap, independent term policies were unveiled for homemakers that came as a breakthrough for the industry. With no dependency on their spouse’s policy or earnings, women could now independently make the prudent financial decision of securing their dependents.

Independent term plan

India is home to more than 160 million homemakers whose invaluable contribution often goes unnoticed and unrealised. Since this contribution is not counterbalanced with compensation, homemakers were left out of the protective protection umbrella of independent term insurance until lately.

They were dependent on their spouse’s monetary standing to secure a life cover. In addition, as the income multiplier was based on the husband’s annual income, they were only covered for approximately 50% of the sum assured.

For instance, if the yearly income of the spouse is ₹6 lakh and the income multiplier is 15 times, then the total eligible cover becomes ₹80 lakh.

Now, if the spouse takes away the cover of ₹70 lakh, this will leave the wife with a mere ₹10 lakh cover. Moreover, it is also worth noting that term insurance typically starts at ₹50 lakh of coverage so this shared coverage might not be enough.

However, with evolving industry norms, the value of a homemaker was recognised with an independent term plan that allows them to secure their dependents without any dependency on a spouse. Homemakers can now opt for term insurance regardless of whether their husband has a term policy. Moreover, the cover amount in these policies is considerable, up to ₹1 crore, which can be adequate to cover any dependents — children, or the elderly.

Know the criteria

The eligibility criterion is quite flexible for these plans to increase their accessibility. This plan is available to homemakers between the ages of 18 and 50.

However, it comes with two primary prerequisites — the overall household income should be a minimum of ₹5 lakh, and the homemaker should be a graduate. Additionally, some insurers have now come up with plans for homemakers who have passed 10th or 12th.

Securing the future

To safeguard the future of the dependents, it is integral to be mindful when determining an adequate coverage amount of the independent term plans for homemakers. This requires a thorough understanding of the financial impact the homemaker’s absence would have on the family.

However, with an insurance coverage, homemakers can now take comfort in knowing that they are leaving behind a financial safety net for their dependents. In addition, this amount can aid in fulfilling long-term obligations, such as funding their children’s education and marriage, as well as caring for elderly parents.

To conclude, homemakers are the engine that ensures the smooth functioning of the family. Though their effort remains unaccounted for in financial terms, a policy like independent term insurance is a monumental step towards recognising their contribution.

(The author is Head-Term Insurance, Policybazaar.com)

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