Why Is Term Life Insurance Cheaper for Women?

Consider this situation. Sahil and Sushama are both working, married and parents to two young children. They want to protect their family’s finances from either of their premature demises. So, they decided to purchase term life insurance for both of them. They were both surprised that Sushama’s premium was less than that of Sahil’s.

Sahil and Sushama are healthy, non-smokers and of similar age. They have applied for the very same term life insurance cover. Why is it then that Sushama’s premium is less than that of Sahil’s? 

Let’s see it from the insurer’s point of view to understand why.

Life Expectancy and Mortality Risk

Insurers assign risk to every policy proposal to arrive at a premium that they can offer. For term life insurance, the risk that they assess is mortality risk. The mortality risk is the risk that you will die within the policy term. They look at various historical data points to try to estimate how long you will live. If your life expectancy is longer, the chances that you will make a term life insurance claim are less. So, they can offer you a lesser term life insurance premium.

What Determines Life Expectancy?

Various factors determine life expectancy. The first one is health and fitness, and the second one is a lifestyle

Is your lifestyle sedentary or active? 

Also, do you indulge in overuse or abuse of substances, such as tobacco, alcohol, drugs and such?

Another determining factor is a family history of lifestyle diseases like diabetes, cardiovascular diseases etc. 

One more factor is the hazard levels of your occupation. You will have less life expectancy if you work in a mine or similarly hazardous workplace. 
Yet another factor is if you have any pre-existing diseases or conditions. These are the major factors that determine your life expectancy.

Women have Higher Life Expectancy

Women have a higher life expectancy in India than men—this is because of various reasons. Women tend to be occupied in less hazardous occupations. They tend to indulge less in abuse or overuse of substances like tobacco, alcohol etc. Women also tend to develop cardiovascular diseases later in life.

Women Are Offered Lower Premiums as their Life Expectancy is More than Men

As we have seen earlier, higher life expectancy reduces the insurer’s risk. It reduces the chances of the insured passing away within the term of the policy. Thus, insurers can offer lower premiums to women for term life insurance.

Why Should Women Purchase Term Life Insurance?

You might be inclined to think: I understand why men should purchase term life insurance. But why should women purchase it? Am I not better off paying just one premium for the man of the house? 

Well, times have changed. The times where men were the primary or sole breadwinners are gone. Today, women are increasingly taking on the role of the breadwinner along with the men.  

Even if the woman is a homemaker, it makes sense to purchase term life insurance. A homemaker dedicates most of her time to the upkeep of the household and children. The homemaker’s passing away means that the man will have to spend more time at home, and he will now have to take care of the household and the children. 

The additional responsibilities take away from the time he might have spent at the workplace and reduce his productivity. This action might, in turn, lead to lesser income earned. Thus, a homemaker’s passing away is also a burden on the family’s finances. Term life insurance for the woman aims to safeguard the household’s finances if she dies soon. That’s why it is a sound idea to purchase term life insurance for women.

Term Life Insurance is Equally Important for Both Men and Women

Sahil and Sushama have realised that term life insurance is equally important for both of them. Because of the lesser premium for Sushama, their combined premium is less. They are happy about that and have gone ahead with purchasing term life insurance for both.

Read more about Types of Term Insurance Plans in India

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