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"Non-working" Spouse - Term Insurance Cover

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Non Working Spouse term insurance
August 25, 2023

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Here’s why getting a ‘non-working’ term insurance cover makes eminent sense

Stay at home spouses and their contribution to the household is often overlooked. Not surprisingly, they are rarely covered by life insurance. However, it is important for non-working spouses to have life coverage so that their dependents do not suffer in case of untimely death.

Insurance, as an investment vehicle, is often not considered a priority. People fall into the trap of earning better 'returns' and ignore the inherent benefits of insurance. This is particularly true for Term Insurance. Though the number of policies sold in India is increasing (7% more policies sold in FY 2022 compared to the previous FY), term insurance does not figure high in it. Within that too, policies sold to "non-working spouses" are insignificant. Non-Working Spouses are those who work silently without any financial benefits, and yet who need the insurance coverage urgently.

“Non-Working Spouse” Term Insurance:

There is a reason the term is kept under quotes. The nature and intensity of work of these "non-working spouses" are often higher than their money-earning counterparts. The job description has critical components like looking after children, managing a household, managing home finance, providing support to all, and many more. And yet, they don't get any salary, perks, or dividends for such work. And only in their absence, their value and the resulting financial impact can be felt.

What is Non-Working Spouse Term Insurance?

Non-working Spouse Term Insurance is an important concept wherein the homemaker gets the benefit of this financial instrument. Here, the earning partner pays the premium and the non-working spouse is covered in the term insurance plan.

Key Features of Non-Working Spouse Term Insurance Plans

There are many key features in the non-working spouse term insurance coverage to make it an attractive option. The non-working spouses can have a single policy in their name or they can go for joint cover. In the second case, they can be included in the existing cover by paying an additional premium.

Benefits of Non-Working Spouse Term Insurance Plan

Affordable premiums are an inherent characteristic of Non-Working Spouse Term insurance. The insurance companies offer many riders at a low rate as well to make the policy more attractive. The sum assured is very high compared to the premium paid. The premium paid is also eligible for tax benefits.

Why Should You Buy a Non-Working Spouse Term Insurance Plan?

As a silent worker, the importance of a non-working spouse in the family in terms of monetary value is often overlooked. It is only felt in case of untimely demise of the person. To cover that monetary impact, you should go for this type of term insurance plan.

How does Non-Working Spouse Term Insurance Work?

The financial impact caused by the absence of the non-earning spouse is calculated and then annualised. Then, a calculation is done to determine how many years it will take to normalise the financial impact. The annualised cover is multiplied by the number of years to find the final cover of the term insurance plan.

Things to Consider While Selecting a Non-Working Spouse Term Insurance Plan

You need to check for the insurer’s claim settlement ratio to make sure your heirs will get the money when needed. However, most of the top insurance companies in India have similar claim settlement ratios. But their calculation of coverage can be very different. Therefore, you need to look out that you are getting suitable coverage.

FAQs

Q. What is the minimum amount you need to earn to get the term insurance?
As per the rules in India, there is no limitation on the earning of policyholders to purchase a term life insurance. Therefore, one can invest in term insurance even being a non-earning person.

Q. How to calculate coverage if you don’t have any earnings?
The general term is 10 times of annual income. However, as mentioned above, for non-working spouses, the coverage is calculated based on the financial impact of their absence.

Q. What is the right age for the term insurance?
Term insurance can be purchased from the age of 18 to 65. However, the faster you invest, the better it is as the premium will be less. Within 30 is a good age to buy term insurance.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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