Women should consider buying insurance for themselves, whether they are homemakers or working professionals, says Ruchika Malhan Varma, Chief Marketing Officer, Future Generali India Insurance Company.
In an interview with MintGenie, Varma said time is a valuable asset when it comes to investing, and the earlier one starts, the more time their money has to grow.
Q. At what life stage of the child, do you think mothers must start discussing savings and investments with their wards?
It's never too early to start teaching your children about money management! In fact, the earlier you start, the better, as children are like sponges, and they absorb information quickly. You can start by introducing the concept of money to your child at a young age, perhaps around the age of seven or eight. You can do this by giving them a small allowance, encouraging them to save a portion of it, and explaining the value of money and the importance of saving for the future.
As your child gets older and starts to understand the concept of saving, you can gradually introduce them to the idea of investing. You can start by discussing the different types of investments, such as stocks, bonds, insurance, and mutual funds, and explaining how they work. For example, by the time my daughter was 13, she already knew how systematic investment plans (SIPs) work.
I was careful to keep the discussion age-appropriate and used language that she could understand. Overall, the key is to start the discussion early and gradually build on your child's knowledge and understanding of money management over time, which will set them up for a lifetime of financial success.
Q. Be it homemakers or working women, why should women focus on buying insurance for themselves?
There are several reasons why women should consider buying insurance for themselves, whether they are homemakers or working professionals. Life is full of uncertainties, and no one knows what the future holds for them. Women often play a vital role in their families as caregivers and providers, whether they are working outside the home or not.
By purchasing insurance, they can ensure that their family is protected financially in case of an unforeseen event like death, disability, or critical illness. This will help to ease the financial burden on their loved ones during difficult times. If a woman is the primary breadwinner in her family, having insurance can be especially important. In case of an unexpected event like disability or death, insurance can provide a source of income replacement, which can be crucial to maintaining the family's standard of living.
Insurance can also be an important part of retirement planning. Women often face unique challenges when it comes to retirement savings, such as earning less on average than men and taking time off work to care for children or elderly family members. Insurance products like annuities or life insurance policies can provide a source of retirement income or savings.
Q. What financial gifts would you like to gift yourself as a mother this year?
As a mother, I look for financial security not just for myself but for my daughter as well. Just like all children, my daughter also receives monetary gifts for birthdays and festivals, which I have diligently put into a bank account for minors. Over the years, the amount has reached a good quantum, and I plan to start a SIP from this amount this year. A SIP is an investment tool that allows you to invest a fixed amount of money regularly in a mutual fund or a basket of funds and is a great way to accumulate wealth over time and provide your children with a substantial amount of money that can be used for education, a down payment on a house, or any other significant expenses.
Another financial gift that I would like to give myself is home insurance. Many people are unaware of the different types of home insurance available and the benefits that they offer. Home insurance typically covers your house against a range of risks such as fire, lightning, explosion, earthquake, storm, flood, theft, and other perils.
Home insurance is not just about covering the infrastructure of your house, but it also covers your personal belongings such as furniture, electronics, jewellery, and other valuables in case of theft or damage caused by natural disasters such as floods or earthquakes. This means that if any of your personal belongings are stolen or damaged due to a covered event, you will be able to claim the cost of repairing or replacing them through your home insurance policy.
Q. Do you advocate mothers working on a separate retirement corpus to secure their future?
Mothers who work outside the home face unique challenges in planning for their retirement. They have to balance career goals with childcare responsibilities, and they may have interrupted work histories that can impact their ability to save for retirement. Additionally, women generally tend to live longer than men, which means they need to save more to fund a longer retirement.
Considering these challenges, it can be beneficial for mothers who work to build a separate retirement corpus to secure their future, to ensure that they have enough savings to support themselves during their retirement years. However, it's important to keep in mind that retirement planning is a complex process, and there is no one-size-fits-all solution. Factors such as income, expenses, investment goals, and risk tolerance should all be considered when developing a retirement plan.
Q. More people are now writing wills to remove discrepancies regarding the nomination. Do you think today’s mothers should also pen their wills?
Absolutely! While traditionally wills were seen as something that older individuals should consider, there are several reasons why people of all ages, including mothers, may want to consider writing a will.
A will can help ensure that your assets are distributed according to your wishes after your passing. This is especially important if you have specific wishes for the care of your children or dependents. A will can provide clarity and peace of mind that your loved ones will be taken care of in the event of your passing. If you do not have a will, the laws of intestacy will determine how your assets are distributed. This can lead to disputes, delays, and additional costs for your loved ones. Having a will can avoid these potential issues and is definitely recommended.
Q. Which investment instruments do you think would serve best to today’s mothers?
A combination of insurance and investment instruments can serve the best to today's mothers. For a mother to continue being a provider and nurturer, she must be in good health. Health insurance is an essential investment for mothers who want to protect themselves and their families from medical emergencies. It can help them cover the high costs of medical treatment, hospitalization, and medication.
Apart from health insurance, term life insurance provides an excellent option for mothers who want to ensure financial security for their families. With a term life insurance policy, mothers can ensure that their families will receive a lump sum payment in case of an untimely departure during the policy's term.
In terms of investments, mutual funds are an excellent option for mothers who want to invest in the stock market without having to pick individual stocks. Unit Linked Insurance Plans (ULIPs) are a type of insurance-cum-investment instrument that combine the benefits of insurance and investment as they offer life insurance coverage along with investment in equity, debt, or balanced funds. This explains why they can be an excellent option for mothers who want to invest in the stock market and at the same time secure their family's future.
The Public Provident Fund (PPF) is a long-term investment option offered that provides guaranteed returns and tax benefits and is an excellent option for mothers who want to save for their children's education or their retirement.