While data from the International Labour Organisation shows that the overall participation of women in the workforce has declined over the past decade, another set of data on life insurance policies indicates that participation of women in the formal sector may actually be higher as of 2017-18.

According to the latest annual report by the Insurance Regulatory and Development Authority of India (Irdai), women bought 32% of the total individual life insurance policies sold in India in 2017-18. On the other hand, ILO data shows that participation of women in the Indian workforce declined to 27.21% in 2017 from the peak of 36.78% in 2005.

Most of the investment in life insurance happens through people who are employed in the formal sector and as the participation of women is increasing there, it is also getting reflected in the number of policies that they are buying, said R.M. Vishakha, managing director and CEO, IndiaFirst Life Insurance Co. Ltd.

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Another reason why more women are seen buying insurance is that often working men in the family buy investment-linked insurance policies in the name of non-working members, including women. Deepali Sen, founder of Srujan Financial Advisers LLP, agreed that it is a common practice.

The total number of individual life insurance policies issued in 2017-18 was 28.2 million, of which about 9 million were bought by women and 19.1 million by men. The policies included insurance products like term insurance, traditional plans as well as unit-linked insurance plans or Ulips. It’s not clear if this is an improvement over previous years as this data is not regularly released.

Protection versus investment

Even though there is lack of clear data, according to Vishakha, more women tilt towards savings and investment products from the life insurance stable rather than term plans as compared to men. “Unfortunately we do not have a formal study, but you will find a lot of women not thinking that they contribute financially. Also, it is rare to find instances where the woman earns more than the man and, therefore, there is always a feeling that the income from the man is more significant and needs to be protected. That makes women buy more savings and investment-oriented policies," she said.

Sen added that this trend does not come as a surprise because there is no need for a (term) insurance policy if someone does not have dependants. “Otherwise, I do not see a difference in approach towards life insurance from men or women," she said, adding that in case of both men and women she advises she has to drive home the point that approaching life insurance as an investment product is a losing proposition.

Financial planners suggest individuals having dependants on their income to take a term insurance policy. These are plain-vanilla life insurance plans where the premium paid goes completely towards underwriting the risk of loss of life of the policyholder and there is no payout at maturity. These policies, typically, cost less than other life insurance products.

However, some planners also highlight the importance of even home-makers taking term plans as their household management actually translates into savings. Some insurers, too, give a term insurance to women who are not formally working or are home-makers. This is typically available only for those women, whose husbands already have a term insurance policy. The sum assured given in such cases is 50% of the sum assured of the husband.

India has a huge insurance gap, but now that women are buying life insurance policies, it makes sense for them to do proper risk analysis and insure themselves adequately instead of looking at insurance from the lens of investment and tax saving only.

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