In India, life insurance penetration is still quite low, with the ratio of life insurance premiums to the country’s GDP standing at just 2.8%, as per the Insurance Regulatory and Development Authority of India (IRDAI).
Even more concerning is the fact that only 35% of the total life insurance policies sold are bought by women.
Despite there being over 65 crore women in India, fewer than 2% actively purchase life insurance policies.
However, there’s a silver lining for women in this situation: term insurance is available to them at a lower premium than men.
Let’s explore why term insurance is crucial for women and why their premiums are lower.
Why is Term Insurance Necessary for Women?
In today’s dynamic world, women are making their mark in all sectors, be it in professional careers or in managing their households.
Many women have financial responsibilities, whether they are working professionals, homemakers, or single women.
Even housewives, whose contributions to the family are often undervalued, play a crucial role in managing the home and family responsibilities.
Single Women: There are approximately 7 crore single women in India, many of whom have responsibilities such as supporting aging parents, siblings, or children.
Term insurance offers them financial protection, ensuring their loved ones are taken care of in their absence.
Economic Independence: Women’s financial independence is vital not only for their well-being but also for the overall growth of society and the economy.
Term insurance can act as a crucial safety net for them, ensuring financial security in case of unforeseen circumstances.
Why Are Term Insurance Premiums Cheaper for Women?
Women can avail term insurance at a lower premium compared to men, and here’s why:
Higher Life Expectancy: Statistically, women tend to live 2-3 years longer than men on average.
Insurance companies factor this into the pricing, as the likelihood of a woman passing away during the term of the policy is lower than that of a man, which reduces the mortality premium.
Lower Mortality Premium: The mortality premium is an essential component of term life insurance.
It reflects the risk to the insurance company if the policyholder passes away during the policy’s term. Since women have a longer life expectancy, they are charged a lower mortality premium.
More Disciplined Premium Payments: Insurance companies often observe that women are more disciplined in paying their premiums on time.
This reliability is another reason why insurers offer them better rates.
Why Term Insurance is Beneficial for Women
Affordable and Comprehensive Coverage: Term insurance is one of the most affordable types of life insurance, providing high coverage at low premiums.
This makes it accessible for women of all income levels, whether they are working or homemakers.
Financial Security: Term insurance ensures that your family is financially protected in case of an unexpected event.
For women, this is particularly important, as it ensures their loved ones’ well-being and stability in their absence.
Tax Benefits: Premiums paid for term insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act, providing additional financial benefits to policyholders.
Critical Illness Coverage: Women often face unique health risks, such as breast cancer and pregnancy-related complications.
Some term insurance policies also offer critical illness coverage, which can be crucial in providing a safety net in case of such health challenges.
The Underserved Group: Working Women
According to IRDAI’s latest annual report, working women are among the most underserved groups in terms of insurance coverage.
To address this gap, the insurance regulator has launched an initiative called ‘Bima Vahak’.
This initiative aims to extend insurance coverage to remote areas by appointing women agents, thereby increasing awareness and making insurance more accessible to women.
