Why young working women do not consider life insurance in their investment portfolio?
Author – Mr. Subrat Mohanty, Head of Marketing, Bajaj Allianz Life Insurance
It is advisable to buy a Life Insurance plan as early as you can. Plans tend to be cheaper when the insurer is younger and healthier as with age, one tends to develop various ailments. This is especially true of women and various health complications they face as they grow older. It will not be amiss to think that young working women below the age of 30 are definitely aware of this maxim. Yet, a quick dipstick that we did amongst this age group proves otherwise. Why, one may ask, do young working women not invest in a life insurance policy as a part of their investment portfolio?
Instead of answering this question, let us turn this around and elaborate the reasons that women, in general, buy life insurance. The number one reason still remains – to financially secure the future of her family, in case of any unpredictable and unfortunate event such as death, accident and permanent disability. In case of a single working woman, aging parents and younger siblings might be economically dependent and it is up to her to ensure that those dependent on her lead a comfortable life, even in her absence. In case of young mothers, a life insurance policy could often ensure a smooth higher education for their child/children. Women with women relatives suffering from hereditary diseases or critical illnesses or women specific health issues such as complications during pregnancy problem during the birth of the child, diseases such as cancer (breast, uterine, vaginal, ovarian, cervical and fallopian tube), etc. often understand and appreciate the stability and protection that a life insurance policy offers, along with investment in a health insurance policy. In case of young newly married women, to ensure economic stability in case of a spouse’s death or permanent disability, she often buys a policy after marriage and leans upon her husband to buy one as well.
So, back to the question, why, one may ask, do young working women, who are open to investing in other riskier instruments such as stocks and mutual funds, not invest in a life insurance policy as a part of their investment portfolio?
At least a case can be made that if she’s single, and especially if she’s single as well as relatively young and healthy and has no dependents as one or both of her parents are still employed, she probably wouldn’t feel a pressing need to go out and purchase some form of life insurance as soon as possible. However, there are certain other perceptions that young women have, either because they are not financially aware or have been misled to believe.
One of the primary reasons many young women avoided buying life insurance is because doing so causes them to think about their mortality. When her whole life lies ahead and dreams and aspirations and a positive attitude are primary, there is a sense of disbelief in her own death, which clouds the sentiment as far as buying insurance is concerned. She is also aware that not only does life insurance not provide an immediate benefit, but it doesn’t provide any at all as long as she is alive. It’s likely that she is turned off by the idea that she will not personally benefit from having a life insurance policy. Another reason is the misconception that buying insurance is an expensive proposition and should be purchased when she earns better some years down the line. Healthy women often claim that they are relatively healthy and do not need one. “I don’t understand it well enough to buy it”, is an oft-repeated lament. Stories of insurance agents willfully defrauding uninformed investors or inhibitions about an intimidating process also often turns her off. Many don’t invest in life insurance as there are no marketing or advertising campaigns or even products targeting them specifically or even explaining the need to invest in this form of protection. Also, in India, life insurance is not a legal requirement. One interesting insight we’ve come across is that fact that many do not invest in life insurance simply because their peers in the same age-group do not. This is a particularly disturbing trend in metros, where this behavior is contrary to expectations of informed financial planning on account of a larger educated and employed women workforce.
Our advice is simple. Do not be misled by misconceptions. Do not procrastinate. Do not wait till, you believe, you are earning enough. Read up; speak to informed investors, especially older working women among your colleagues or family friends. Remember, young woman, you are not immortal and the earlier you invest in insurance, the better it will be.