International Women's Day 2023: How women can manage their finances better

International Women's Day 2023: For a country that is increasingly seeing women assume leading financial roles – including that of finance minister, India still doesn’t see most women taking charge of their finances. Several recent surveys have just reiterated the fact that women still tend to depend on men for handling their finances. A lack of financial literacy is surprisingly prevalent even among the working women who are the earning members of the family but seldom participate in financial planning.

 

The decision to get insurance, a fundamental and non-negotiable protection shield for every individual, often remains with males in families. However, does it have to be?

 

The insurance industry is constantly evolving with the changing needs of the consumer, factoring in different kinds of demographics. With an influx of innovative products meant to cater to women’s financial needs, they no longer need to depend on anyone for their financial planning.

 

 

 

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 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 policyholder's income and is not linked to husband necessarily having a 2 times life cover.

 

The eligibility criteria is also quite lenient to make the plan more accessible - the annual household income must be a minimum of Rs 5 lakh, and the homemaker should have passed class 10 or 12.

 

The plans are available to homemakers between the ages of 18 and 50. For instance, a homemaker aged 30 years with an annual household income of Rs 5 lakh can purchase a life cover of Rs 50 lakh, which was earlier limited to only Rs 25 lakh and was contingent on her husband having a Rs 50 lakh cover.

 

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 recognises this need and designs products that effectively cater to women investors.

 

Given the current market conditions, rising inflation, and uncertainty in general, it’s indispensable to invest properly for adequate fund growth.

 

Therefore, 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.

 

One can gain tax-free returns as high as 7.5 per cent in these plans, making them a better option over traditional options like fixed deposits.

 

Moreover, 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.

 

To make the deal sweeter for women, some plans deliver additional maturity benefits. For instance, up to an additional 0.5% maturity benefit for women investors.

 

 

While India still ranks low when it comes to women’s participation in the workforce, working women still need robust retirement planning.

 

Contrary to popular belief, one needs to start early if they want to build a sizable corpus.

 

So, if you are a working woman, an annuity plan should definitely be on your radar 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.

 

 

Who said women always have to play it safe and can’t take risks? The 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% 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.

 

To conclude, with women now a part of all sectors of life and handling financial matters at home and in the outside world, making investment decisions should also be in their purview.

 

Therefore, women should take control by comparing various investment policies and their features online. Also, reading the fine print and policy documents carefully is a must.