A Life Cover For The One Who Cradles Lives

Homemaker – one word that encompasses multiple roles all rolled into one person – a wife, a mother, a daughter, a sister, a home manager. The role of a homemaker is probably the most unrecognised or “taken for granted” in the family.

Being a homemaker requires frequently shifting from one role to another without any notice of each role demanding a different competency. And the homemaker does this every day. In a fast-paced life, when others are busy running to and from work / school / college – it is the homemaker who ensures the safety and wellbeing of the entire household.

Homemakers are increasingly becoming the principal influencers in all important household financial decisions. Protecting and safeguarding the family’s financial base is one area where homemakers exercise their maximum influence and with great responsibility. This is not just about the financial decisions taken to ensure the smooth running of the household but extends to critical life needs of all the family members – financial availability for the child’s education or marriage; income availability after husband’s retirement or to take care of health contingencies in the family.

Towards this extent, every homemaker is responsible to ensure that the husband has adequate life cover equivalent to at least 10 times the annual income, to financially protect the family in case of any unforeseen events.

The effectiveness of her role as an influencer can be gauged from the fact that even research studies suggest that the presence of stay-at-home spouse is what makes a family economically and socially stable. The next logical question then is – what about the protection of the homemaker herself, an important asset in the family?

We generally fail to perceive the financial value of her role. But let us reflect on the financial cost of managing the household in the absence of a homemaker. Or, one may reflect on the impaired earning ability of the breadwinner in such a scenario.

Therefore, there is a need to ensure that the homemaker has a suitable life insurance cover. The fact the financial value of her role merits adequate life insurance cover. It is necessary that we should try and assign a financial value to the contribution over lifetime. This helps one to reasonably quantify the financial value of her role. For example, if Rs 3.5 lakh per annum is the estimated value of her services, then, assuming a nominal rate of return of 8% over a 10-year period, the value of services would be Rs 50 lakh. Another method to estimate this is to link it to the life insurance cover of the earning member. For example, it can be a third to a half of the sum assured that the husband’s policy carries. This is the life insurance cover amount that needs to be provided to the homemaker.

Also, it is imperative to plan for health-related needs and adequate health insurance should be provided for the homemaker, because the cost incurred during a critical illness is not just the medical expenses but also the expenses that would be incurred in managing the household in the absence of the homemaker to keep things in order.

A fixed-benefit health product to provide for additional financial coverage against critical illness or a pure term cover could be an ideal solution for the homemaker. At Kotak Life, we understand the requirements of a homemaker and both our Kotak eTerm and Kotak Health Shield are designed to cater to the varying requirements.

It is not just important to provide insurance to the homemaker but also make her understand the importance of life insurance for her family. With her inputs the solutions could be provided as per the specific needs of her family.

The author is the Managing Director and CEO at Kotak Mahindra Life Insurance Company

Disclaimer: Views are personal and do not reflect the views of Kotak Mahindra Life Insurance Company Limited.