According to a rough estimate, India has approx 60 Mn Housewives. The surveys suggest that there is a very little financial awareness among housewives of the society. Thanks to male-dominated Indian society. In India, financial planning is linked to the breadwinner of the family. Logically, there is nothing wrong in it from a financial perspective. It’s a misconception that Financial Planning is always linked to Investment. To financially secure a future and financial planning are different from each other. In past, there was a proposal floated to include the contribution of housewives to the country’s GDP. According to rough estimates, on average Indian housewives spend 4.5 Hour per day on household work. As it is unpaid work, therefore, it is not accounted in GDP.
A similar study was done in the USA. It was found that if this unpaid work is added to GDP then the countries GDP will increase by whooping 26%. In the same study, it was concluded that if unpaid work of housewives is quantified then it will be worth approx 11,000 USD per month. Though the study done in the USA might not be relevant in India but perspective is valid and holds true.
The objective of the details shared in the first paragraph is to give you a rough idea that if unpaid work is quantified then it means some serious money. In other words, housewives are not earning directly. At the same time, through household work they are indirectly contributing to the finances of the household. In turn, they are indirectly contributing to the economy of the country :).
The point i am trying to make is that housewives are indirectly contributing to the household expenses. It is important to financially secure the future of housewives. Here i am not suggesting to invest in their name or buy insurance. The only way we can financially secure their future is by taking steps to ensure their rights in the case of any unfortunate event. Now you must be wondering, The nomination of all my investments is in my wife’s name so what else is pending. This post is a result of situations faced by housewives in the case of unfortunate events. I thought of sharing it with my readers. I hope you will find the points mentioned in this post useful.
Housewives – 5 Steps to Financially Secure The Future
1. Insurance: As a thumb rule of insurance, the coverage of breadwinner of the family financially makes more sense. In past, some insurance providers launched joint life insurance plans. These plans cover both husband and wife. I will share more details in my next post on these plans. In the case of term insurance plan, the breadwinner should buy a cover equivalent to ten times the annual salary. As housewives don’t have any source of income, therefore, it is difficult to get term insurance cover. For lower amount, income proof is not required. The premium is high and coverage is less. Lastly, the traditional investment-linked insurance plans like endowment plans etc are pushed to the housewives. I already shared in my previous posts that these should be avoided at any cost.
In my opinion, Health Insurance is a must for housewives. A family floater plan will be good to go. Depending on the family history, a critical illness cover can also be bought. Always remember that insurance coverage comes at a cost. Financial planners suggest that each and every insurance cover is MUST. I disagree. If both husband and wife will opt for all the covers then monthly premium may touch 15k to 20k. It is huge. Insurance should not be bought under fear or should not be an emotional decision. From a personal finance perspective, the decision should be well thought through and should be need based.
2. Insurance Policy effected under Married Women’s Property Act: I don’t think so anyone is aware of it. A husband can buy a life insurance policy effected under Married Women’s Property Act to safeguard the financial interests of a wife. An insured person i.e. husband/male proposer has to fill addendum to Life Insurance Policy. For a sample, click here. It is applicable only if the beneficiary of the policy is Wife/Son/Daughter. Basically Married Women’s Property Act protect the property of women against the creditors. It is insulated from all the court orders, income tax department attachment, guarantees etc. In other words, after signing the MWP addendum, the insurance policy does not belong to the husband. In the case of death, all the proceeds are passed only to the beneficiary of the policy. It is very critical and crucial step. All the insurance policies of the husband should be effected under Married Women’s Property Act. I will discuss it in detail in one of the future posts.
3. Transparency: According to news reports, Rs 64000 Cr of wealth is lying unclaimed with insurance companies, banks, post office etc. It is a rough estimate and does not include many small savings schemes. One of the key reason can be that legal heirs and beneficiaries are not aware of these investments. All the financial planning is a waste and useless if the beneficiary or legal heir is not aware of it. Life is uncertain and we should accept this fact. It is important to maintain transparency with your spouse in case of financial matters. Though this step is never discussed as a part of financial planning. In my opinion, it is critical step to financially secure the housewives.
4. The Wife should not be a Co-Borrower of a Loan: Recently, i came across a case in which the wife is the guarantor of husband’s business loan. To be honest, it is suicidal in nature. Not many people are aware that being a co-borrower but not the co-owner also means you are a guarantor. Banks always say that it just a formality and nothing will happen. They never inform that co-borrower means a guarantor of the home loan. If the wife is working it is understandable. A housewife being a Loan Guarantor is unimaginable. Just give a thought how she will pay the debt in case of any unfortunate event. Any loan should be backed by the equivalent amount of insurance effected under Married Women’s Property Act. Only if the wife is co-owner, she can be co-borrower.
5. Legal Heirs: It’s a common notion that after husband’s death all the wealth will be inherited by wife and children. It is not true always. If the husband dies without WILL then under Succession Act the wealth is inherited by class I legal heirs. Legal heirs of a male include wife, children and the mother. Now the mother is included with an intent to protect the rights of women at old age. In multiple cases, i observed that it becomes a major dispute between mother in law and daughter in law. I am not favoring any party but in this ball game, the rights of the none is protected. It is important to execute a WILL and keep all the beneficiaries informed.
Through this post, i tried to cover some of the important points to financially secure the future of housewives. A lot more can be shared but the open dialogue between husband and wife on this matter is important. Hope you liked the post.
Copyright © Nitin Bhatia. All Rights Reserved.
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