International Women's Day 2024: How women can manage their finances better

International Women's Day 2024: India has a woman finance minister, top businesswomen and CEOs handling billion-dollar companies, and women fund managers managing the wealth of some of the richest and wisest.

Despite Indian women managing finances for people from all walks of life, there is a small population of women in the country managing their own wealth.

Or, there are only a few of them who take part in the financial planning of their own households.

The main reason for that is a lack of financial literacy, which is surprisingly prevalent even among working women who are also earning members of the family.

Financial decisions such as buying an insurance policy or a fundamental and non-negotiable protection shield for every individual often remain with male members of families. 

But if women can prove their mettle in all walks of life, they can also make financial decisions for themselves and their families.

They no longer need to depend on anyone for their financial planning.

Whether you are a working professional or a homemaker, here’s how you can make your financial decisions independently with these options:

Independent term plan for homemakers

Traditionally, financial planning has always been linked to one’s earning capacity.

This meant that homemakers, who constitute the backbone of a family, were often left out of the protection segment.

While they might not be producing economic output, they indirectly hold up the family’s financial infrastructure.

Earlier, they had to rely on their partner's income and choice to buy a life cover.

That also covered them with only 50 per cent of the sum assured, as the income multiplier was based on the spouse’s annual income.

However, as times changed, insurance companies specifically designed independent term plans for homemakers.

This eradicated their need for and dependency on their husband’s income and policy.

This product emerged as a vital step towards recognising a homemaker’s contribution and insuring her life with adequate financial protection.

The cover amount in these policies goes as high as Rs 1 crore, which sufficiently covers a homemaker’s dependents.

The eligibility criterion considers the overall household income instead of the policyholder's income and is not linked to the husband necessarily having a two-time life cover.

Term Insurance Plan

It is a common misconception that homemakers don't contribute financially to the family or do not have a financial obligation towards the family, and if anything happens to her, the family's income would not be impacted.

Rhishabh Garg, Head, Term Insurance, Policybazaar.com, says that the loss of a homemaker is profound, affecting the family significantly. "Recognising and quantifying the financial value she brings to the household, we emphasise the importance of homemakers obtaining term insurance."He further said, "Homemakers can easily buy a term plan following a simple procedure, and various plan options are available to choose the right coverage as per their needs and requirements. Additionally, they can secure term insurance independently, even if their spouse doesn't have this coverage." 

Guaranteed returns plans with special benefits for women 

Investing still continues to be a male-dominated territory.

However, a secure financial future is a non-negotiable need for everyone.

The financial services industry has products that effectively cater to women investors.

Women looking to invest long-term for life goals like their children’s education, marriage, or their retirement must consider guaranteed return plans.

As the name suggests, the policies provide a fixed rate of return over time.

To explain, when purchasing these plans, you lock in the rate of return for the entire policy period, making them immune to market volatility.

For digitally savvy millennials, it also provides new-age benefits that allow for a quick and hassle-free onboarding process by selecting the investment amount, choosing the policy term and variant, and making the online payment.

Apart from that, some plans deliver additional maturity benefits to women. 

Annuity plans

Working woman should have an annuity plan because it is a secure pension plan.

There are two kinds of annuity plans – immediate and deferred. Depending on your preference, you can go for the former, which requires you to pay a lump sum amount and start your income immediately.

Alternatively, you can opt for the latter, which lets you receive your income at a later stage.

Capital guarantee plans Capital guarantee plans are for women who are open to taking moderate risks on their investment while keeping the principal amount safe.

To explain, under this plan, the money invested is divided into two parts: 50–60 per cent in a guaranteed return plan, which secures the invested funds in safer debt instruments, and the remaining in a Unit Linked Insurance Plan (ULIP), which takes advantage of market-linked investments.

This combination ensures the policyholders get a fixed amount at the end of the policy term.

However, these plans provide relatively lower returns than pure ULIPs.

Also, in this plan, the longer the tenure, the higher the returns.