Why homemakers need to be insured

It has always been a question of common belief that the male member or the bread winner of the family only needs to be insured. This belief has emerged due to the fact that the financial interests of the other dependent family members had to be protected in case of death of the bread winner. However changes of lifestyles and with more women being employed in lucrative professions, both in big cities and towns, the perception of insurance has changed.

In addition, the entry of many MNC-Indian insurance joint ventures, and their unique solutions and products, it is time we all looked into taking insurance policies for homemakers, who have been neglected all these years with regard to insurance, too.

It would be interesting to study why homemakers too need insurance:

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director ofHolistic Investment Planners(www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

Here are a few reasons why homemakers too need to be insured:

• It is significant to note that in a country like India, homemakers contribute to households in the form of cooking, education of children and other routine work. But their importance and value of services evaluated in monetary terms is greatly neglected. It is true that the absence of these services on the death of the homemaker is a big financial impact on lower and middle-income families.
• Another noteworthy factor that places a value on insurance of homemakers is that they provide great counsel to their spouse and children. So losing them would mean that lots of money would have to be spent on counseling services proving that loss of love and companionship is priceless.
• It is also true that no one could replace a homemaker mother and her loss could make it difficult to get competent and loving people to look after the family and children. It is also significant to note that the cost of competent day care centres could be high and the cost of not insuring a homemaker in lower and middle income families could be pretty high.
• There is a money value behind each and every household work performed by the homemaker. In case of any eventuality to the homemaker, one need to shell out more money to upkeep the house in order.

Considering various aspects like paying expenses out of the pocket, remarriage and insurance, insurance proves to be the most reliable and safest solution. The insurance cover should be proportional to the amount of financial loss that would be suffered or through a need based cost replacement analysis.

In addition to insurance to guard against financial liabilities in case of death of a homemaker it is vital to also plan for a dream retirement home and college education funds through various insurance linked plans.

Health insurance:

It is also true that insurance needs to be taken for critical illness, prolonged illness, accident or a major hospitalisation for all family members. It would also be beneficial to take health insurance policies early in life to gain benefits like full cover of all ailments and lower premium.

However each family could have their own unique insurance needs, so taking the advice of a trusted financial planner in the form of an insurance advisor or trusted bank would help. They would render correct information, best skills and advice based on your family's financial circumstances, priorities and risk profile.

Insurance for the whole family also requires that all the adult family members be fully aware of all the insurance policies taken, their benefits and exclusions and where they are kept. Having an open discussion about long term savings and insurance plans both for the bread-earner and homemaker and for children build a better family understanding and bond. They also convey the message that proper life insurance coverage should form an integral part of financial planning in families.