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Republic Day - Empowering Women with Canara HSBC Life Insurance

Short-term saving plans

The 74th Republic Day has been dedicated to the 50% of the population of India – women. The day has been dedicated to commemorating the contributions made by the brave and hard-working mothers and daughters of India. Women make up almost 52% of the employable population now.

After the improvements in the last decade, Indian women seem to be catching up with men in education as well as professional contributions. Most of this growth has been in the rural and semi-urban areas. Economic progress follows professional and educational progress and the scenario for empowered Indian women is not different.

Also read - Reasons why a life insurance is important for women.

Financial Empowerment of Women

The next ideal step for the educated and empowered women of India is to have greater financial control. With employment women often face a double responsibility of managing their finances and the household. That is why a little bit of financial education on which investments to use and where also becomes important for today’s women.

With earnings, savings become necessary, and with savings the knowledge of investment options. The following steps should help you understand the flow of savings and how it will help your independent future:

Step 1 : Open a bank account

Step 2 : Budget your income

Step 3 : Set savings targets

Step 4 : Start diverting savings to investments

Step 5 : Learn about investments

Step 6 : Insure yourself and your loved ones

Step 7 : Grow your savings & wealth

Step 8 : Review & repeat steps 2 to 7

A bank account will help you organize your money and turn your savings into investments faster. Also, you earn interest on the idle money lying in the bank. You also have the following benefits with a bank account:

  • Access to banking products like fixed deposits, recurring deposits, etc.
  • Easier access to credit
  • Faster conversion of savings into investments
  • Easier to receive money from matured investments
  • Better financial control

Budgeting your Income & Saving Targets

Budgeting is a simple yet effective way to maintain financial discipline. Whether you have a regular monthly income or are self-employed, budgeting allows you to allocate your money confidently.

If budgeting is a new thing for you, start by simply dividing your income into spent and saved income. The general savings ratio out of your income should be based on your age (see the age savings ratio for reference).

Age Ideal Savings Ratio
25-30 10-15%
30-35 15-20%
35-40 20-25%
40-45 25-30%
45-50 30-35%
50-60 50%+

So, if you want to have a simple budget, just put aside a part of your income to save. The size of that part should correspond to your age in the table. After removing this part, the rest can be dedicated to expenses.

Learn About Investments

It is often difficult to put your hard-earned money into contracts you don’t understand or don’t see the benefits of. Also, knowing the investments will help you maximize your benefits from them. Here are the most important investment options you should know about:

Types of Goal Ideal Investments Important Features
Short-Term less than a 3-year term
  • Post Office/ Bank FDs & RDs
  • Liquid Mutual Funds

  • Highly liquid
  • Easy to start and stop
  • Earns good return on investment
Mid-Term 3 years to a 5-year term
  • Tax Saving FDs,
  • Diversified debt funds
  • Slightly less liquid
  • Saves tax upon maturity
  • Earns well for the investment period (better than short-term investments)
Long-Term 5 years and more
  • NSC
  • PPF
  • ULIPs
  • Equity Mutual Funds
  • Guaranteed Savings Plans
  • Equity stocks
  • Less liquid
  • Lock-in period of 5 years or more
  • Higher volatility
  • Higher yield over the investment term
  • Tax savings upon investment
Retirement Savings
  • ULIPs
  • PPF
  • NPS
  • Lower liquidity helps in long-term wealth creation
  • Very important for future financial security

Investments help you channel your savings towards bigger financial goals. However, with investments, you also need to ensure adequate financial protection from mishaps.

Why is Investing Important for Women?

Health and life insurance are the best way to have an adequate financial cushion against unforeseen mishaps. Additionally, you can also use life insurance plans to save and protect important financial goals like:

  • Child’s higher education and marriage
  • Home purchase loan repayment goal
  • Retirement/ sustenance for a dependent after your untimely demise
Insurance Plans Why Invest in It? How to Buy?
Mediclaim Insurance Financial support for medical emergencies, hospitalisation, and general healthcare cost Buy for self and family. Also, for parents, if they are uninsured.
Critical Health Insurance Benefit payments upon diagnosis of life-threatening illnesses, i.e., cancer, renal failure, heart attack, etc. Buy as a rider with health or term life insurance plans.
Term Life Insurance Plan Protects your family from financial hardships due to your untimely demise Buy online with adequate riders, and cover size. If you are employed you can buy a standalone policy, if homemaker, join the policy with a working spouse.
Guaranteed Savings Plans Maturity value is guaranteed, helps safeguard important goal Start saving as per your goal, you can invest to achieve a specific goal value.
Unit Linked Insurance Plans (ULIPs) Allow diversified investment into equity and debt funds, best for wealth creation You can buy a lifetime plan with a maturity age of 99 years. Partial withdrawals can begin after 5 years of investment. However, better stay for the long term for higher corpus growth.
Pension/Annuity Plans Convert large sums into safe, regular income Once you have saved a large amount of money, buy deferred annuity plans with regular investment. The best time to buy is after 50, or when you are close to retirement.

How Much Life Cover should you Have?

Having an adequate amount of life and health coverage is important. The plans are inexpensive but will keep your loved ones financially safe in the rare event of your demise or medical emergency. The ideal amount of cover under both plans differs:

  • Life Cover: 10-15 times your annual income
  • Health Cover
  • Mediclaim equal to your annual income
  • Critical illness cover equal to 5 times your annual income

Thus, if you have an annual income is Rs 5 lakhs you need to have the following amount of life and health insurance covers:

  • Total Life Cover: Rs 50 to 75 lakhs
  • Mediclaim: Rs 5 lakhs
  • Critical Illness Cover: Rs 20 - 25 lakhs

The best way to secure a life cover of this size is to buy a term life cover. Also, since the coverage amount depends on your income, the coverage should increase as your income grows.

You can either buy a new term life cover every few years or buy a term life cover like iSelect Smart360 Term Plan from Canara HSBC Life Insurance. This plan allows you to block your premium rates for the first five years.

Life insurance premium rates increase with age. Block your premium option allows you to increase your cover without increasing your premium rates.

Review your Financial Life

Your financial life is closely intertwined with your personal and professional life. Often your expenses keep increasing, then your income may also grow and goals change. Reviewing your financial life every year will ensure that your money keeps pace with the changes in your life.

And finally, don’t forget to keep up your savings ratio to ensure a prosperous future for everyone around you.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

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