By Nayan Ananda Goswami, Head – Group Business and Retail Sales & Service at SANA Insurance Brokers Pvt. Ltd.
Death and ill health are inevitable part and parcel of the circle of life. Investing in life and health insurance is not really an “either, or” question; instead, it is a conscious decision of mitigating risks and safeguarding yourself and your near and dear ones, if and when misfortune strikes in both situations.
Women who believe in intelligent financial planning for a secure future should ask themselves, “Which schemes should I invest in such that my family and I are assured of financial safety and wellbeing during my lifetime and even after I’m gone?”. Both life and health insurance are assets that serve the objective; albeit in different aspects. A more meaningful approach to the question, “Which is more beneficial for women – Life or Health Insurance?” would be to first understand the structure of both instruments, and then assess benefits offered under each.
Life Insurance: Your debt-free legacy
Life Insurance is like a promise you make to your family that their financial needs will be taken care of even when you are no more, or that you will have sufficient capital to help you tide through retirement and old age unaidedly. There are a couple of categories in life insurance to consider. One is pure term plans that award death benefits to the beneficiary in the event of your unfortunate demise. The other is whole life plans (like ULIP, Endowment etc.), which is a smart way of multiplying your money in your youth and enjoying the benefits during old age, or leaving behind a corpus for your child’s education, marriage or any other familial financial commitments upon your passing. The bereaving family would be struggling to come to terms with the loss of a loved one.
With a life insurance investment, at least the void of regular income can be filled to a great extent, particularly if the woman is the primary breadwinner of the family. Even in the case of women who do not have the alpha responsibility of providing for the household, buying a unit-linked insurance plan will mean a good rate of return on the premiums invested. Life insurance in India is relatively cheaper for women than men as their life expectancy is higher. Furthermore, premiums paid towards life insurance are eligible for tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act of 1961, which means women can save that money and invest it further.
Health Insurance: Your wellness promise
Health Insurance is the financial safety net you provide for your family members and yourself against rising medical costs. Accidents can happen anytime, and grave ailments are on the rise among women. Meeting the cumulative expenses related to daycare procedures, OPD costs, in-patient hospitalization, diagnostics, medicines, consultations etc. out-of-pocket would become unbearable. For a nominal premium amount, you can get a substantial sum insured that takes care of the medical expenses of all insured members. Of course, there are key factors to consider like age, past and present health, lifestyle choices, current and future healthcare requirements etc. before deciding on which health insurance plan to settle for.
Depending upon the plan, it would cover the costs of treating multiple grave ailments, which would effectively mean less strain on the family’s personal savings. Health Insurance premiums also qualify for tax deductions up to Rs 25,000 (Rs 50,000 if you are aged 60 years and above, additional Rs 25,000 if you are paying health insurance premium for your parents below 60 years, and additional Rs 50,000 if you are paying the premium for parents who are senior citizens) under Section 80D of the Income Tax Act.
So, which is better?
For 20-something women who do not have any financial responsibilities or dependents, health insurance might be the top in the order of priority compared to life insurance as it is a no-contest investment irrespective of age. A few years hence, when you are progressing in your career or plan to start a family, you could consider taking a whole life plan that gives a decent return-on-investment, or a term life policy which benefits your nominees. Keep in mind the affordability factor, your life stage, company-sponsored insurance, if any, etc. when doing your investment planning.