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Can Housewives Buy Term Insurance Plans In India?

A term insurance policy is the preferred choice for a majority of citizens in India. It is quite natural, considering that term insurance benefits the policyholder’s family or nominee upon their untimely demise within the policy period. In this scenario, it pays out a sum assured amount, being a pure form of life coverage that covers the loss of income. But what about homemakers who do not contribute financially to the household? Do they require term plan coverage? This article will try to arrive at the possible answers to these questions. 

Homemakers And Term Insurance

Homemakers or housewives are the pillars of their households, performing a multitude of responsibilities that are hard to fulfil otherwise. A Term insurance policy for homemakers will go a long way towards helping their families combat future financial hurdles due to their absence, even though the emotional void can never be made up. While homemakers do not conventionally earn revenues for the home, they contribute towards its financial progress by taking care of diverse tasks. Homemakers can be called the operations managers of households, keeping them running smoothly and indirectly contributing towards their progress from financial and social perspectives. 

Can homemakers purchase term insurance? The answer is yes. Going by the HLV (human life value) concept followed by the insurance industry, term insurance plans would have a sum assured that is approximately 15-20 times the yearly income of the primary breadwinner, which would suffice for the spouse and children in case of unfortunate death in the policy tenure. However, there was no defined HLV in the case of homemakers since they did not conventionally earn revenues for the home, and their demise would not lead to any income losses. 

However, housewives add greatly to the family’s financial standing and value. For instance, imagine if the household had to employ multiple people to take care of all the tasks executed by homemakers. This would dent its savings and investments greatly. It is tough to estimate the financial contribution made by a housewife directly. However, it is possible to secure the life of a homemaker, taking future financial hurdles of the family into account. Here is why homemakers should invest in term insurance at the earliest. 

Why homemakers should purchase term insurance plans

Here are some compelling reasons that you cannot ignore: 

  • Homemakers also share responsibilities for children, their growth, and other family goals
  • Married spouses should have financial plans ready for the welfare of their children in case anything untoward happens to them at any stage
  • This helps dependents and children maintain their lifestyles, while the term policy can also enable future support for higher education and health-related expenses in case of any unfortunate incident
  • Term insurance plans offer sizable coverage for a comparatively lower premium. Some insurers also enable options to scale up coverage after life events such as childbirth
  • Term insurance comes with tax deductions up to Rs. 1,50,000 under Section 80C on the premium payments. The income-earning spouse can get this deduction after paying the premiums for the policy and deductions on policies for themself and the children, subject to the overall limit of Rs. 1.5 lakh. The term insurance death benefit is also tax-exempted under Section 10 (10D) of the Income Tax Act.

While these are some of the biggest reasons why homemakers should purchase term insurance plans, what are the watch-outs before taking an investment decision? Read on for more on this below. 

What to look for while buying term insurance plans? 

Homemakers should keep these factors in mind before investing in term insurance plans: 

  • The sum assured or life coverage should be sufficient to cover existing liabilities, future goals of dependents, and monthly expenditure
  • The insurer should be a reliable entity with a good claim settlement ratio (the ratio of claims settled to the total number of claims for a specific period)
  • The premium amount should be easily payable without any financial strain or compromises while keeping the coverage as high as possible
  • There are term insurance plans with the return of premium facility as well. For those starting early, this can give them a lump sum maturity benefit if they survive the policy tenure.

Homemakers should thus purchase term insurance plans as early as they can, ideally when they get married and start running their households. The coverage can be scaled up once they have children and also with evolving needs and goals of the family. 

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