Santosh Agarwal, the Chief Business Officer of PolicyBazaar.com, holds 14 years of work experience in the Finance sector. On the occasion of International Women’s Day, she talks to Women Entrepreneur India about women’s current place in the Indian finance landscape. She also sheds light on the importance of fostering financial inclusion, while explaining the basics of utilizing insurance as a tool to create financial freedom for women.
Women and finance have always had a complicated relationship. Although women were entrusted with managing a household’s finances, yet they lacked the agency and opportunity to make bigger financial decisions. Women’s distant relationship with personal finance and wealth creation stemmed from a gaping gender gap in financial education.
Due to the lack of financial literacy among women, they fall behind in possessing awareness about financial services that can help their personal and professional lives. With time, financial inclusion has gained traction as a major cause for concern and its repercussions have been highlighted.
In such a scenario, the onus falls on government bodies, financial institutions, and businesses to educate women about the basics of finance.
To shed light on financial inclusion and the basics of finance, Women Entrepreneur India spoke to Santosh Agarwal, Chief Business Officer of Life Insurance Vertical, PolicyBazaar. She delves into her expertise in the field of insurance and talks about how it can be used as a tool for wealth creation by women. Santosh also simplifies the process of picking the right insurance policies for Indian women.
Here are choice excerpts from the extensive conversation.
Take us through your life and professional journey. Also, shed light on your work with PolicyBazaar.
I embarked on my journey with Policy Bazaar approximately 12 years ago. Hailing from a modest, middle-class background, my roots trace back to Darjeeling, where I completed my graduation before venturing to Mumbai to pursue my BA. Following a brief stint of two years in the media sector, I found my calling in the financial industry and joined Policy Bazaar.
Reflecting on my professional trajectory, I've accumulated 14 years of valuable work experience, with the bulk of it dedicated to Policy Bazaar. The allure of the financial sector had always captivated me, making Policy Bazaar an obvious choice when I set out on this path.
I was drawn to the insurance sector because I believed I could make a significant impact compared to other industries. This led me to join PolicyBazaar, where I found a dynamic team of individuals dedicated to revolutionizing the way insurance is perceived and consumed in India. Traditionally, insurance had been viewed as a product pushed onto consumers rather than something they actively sought out. Policy Bazaar aimed to change this perspective.
My journey at PolicyBazaar has been fascinating. I began in a business development role, then transitioned into product management, followed by assuming broader responsibilities in overall personnel management. Today, I have the privilege of leading the entire life insurance division at Policy Bazaar.
As a woman leader in the field of finance, tell us about your perspective on the importance of women’s financial literacy
Addressing the issue of low financial literacy among women in our country is paramount. Even among those who are financially literate, there is a noticeable gap in active decision-making regarding financial matters. It's a multifaceted problem that demands a multifaceted solution.
It needs a multifaceted approach to solve it. So, one is that literacy itself is low, and even within the literate set, people have the confidence to be able to make those decisions, even if that is low. To solve the first challenge, education is the foremost important step to make our women more financially literate. Along with education, tasking women to be able to make small financial decisions that begin at home, will not give you the confidence to go about it, but also builds one's intellect over time. It can begin with something as basic as paying bills.
If you start paying bills, you will understand how to use various payment methods, you will understand UPI, you will understand how net banking works, and you will understand how credit cards work. So, very basic things like that can be a starting step into financial literacy, and then evolve into more serious decisions around how much you save, how much you invest, where you invest, and what kind of diversification is required when you make a sound investment. I think those can be the later steps in that journey, but, of course, education is foremost. I would say the social and cultural fabric within the family and your ecosystem, that empowers you to say that you are somebody who can, who understands, you know, how finance needs to be managed.
You have education around that, and you are capable of making your own financial decisions. Even that, I would say the social fabric is very important, especially during the upbringing years, that will go a long way, will helping women be financially independent. So, I think both aspects are pretty important, education and the cultural aspect as well.
How can women use Insurance as a tool to build wealth and gain financial freedom for themselves?
When it comes to insurance, its important to understand what is insurance meant for. Insurance is meant to cover yourself if any unfortunate event were to happen, and then, be financially secure. That's what insurance means, and what does that financial independence through insurance come from? I think the first thing that one should go about is buying yourself a health insurance product, which means that if you fall sick, and especially seriously sick, which needs financial investment beyond your means, then you get the best of healthcare.
The insurance product covers the cost of it. I think that is the most important tool that people should adopt. And this goes for both men and women.
So, the moment you can manage your life, and you start to work, you start to earn, I think health insurance is a primary product that one should have. And you start with that, you should then plan to also take term insurance, which is another key financial tool that one should have. And what that helps you do is, if anything unfortunate were to happen to you, an untimely device, then people who are dependent on you, your family, your children, your spouse, your parents, basically their lives are not impacted.
And I think term insurance is a very, very economical product. A one-crore term insurance product costs only about 10,000 rupees a year. So, if you think you can pay it in a monthly fashion, it's about 800 rupees a month.
So, it's not heavy in your pocket. Both term insurance and health insurance, ensure that you are well protected. I think that's the first step in insurance.
And then, comes wealth creation. I think that I would place it as the third target. Once it is secured and protected yourself, then you should think about wealth creation through insurance.
And there are various ways of creating wealth through insurance. You can diversify your portfolio by buying a fixed-income plan, a plan basically where the rate of return is guaranteed. And insurance gives you long-term guarantees.
Unlike, you know, for example, a fixed deposit is also a good way of getting a guaranteed return, but a fixed deposit is largely a five-year product or a 10-year product. In insurance, you will get a rate guarantee for 20, or 30 years. That is one way of wealth creation.
The other way of wealth creation is investing in the markets. Let the fund manager manage the investment for you. Invest in a market-linked plan, where the money that you're investing will get invested in various stocks in the stock market.
And actively a fund manager will manage your money. And depending on the cycle, the market cycles, they will change or diversify your portfolio or, you know, between debt and equity ratio such that your investment is efficient. At the same time, you're not taking too much risk.
So, I think diversifying through a fixed rate instrument, diversifying through a market-linked plan, and having some surplus money or emergency fund is something that you should have. And I think having an emergency fund that is almost equal to six months of your salary, is also one thing that you should always keep in mind. And that money can be parked in any liquid mutual fund.
It can be parked in your savings account, you know so that if something happens, there is an emergency fund available. So that would be the, I would say, the third step in terms of wealth management and wealth creation.
Could you simplify the process for women who are looking to buy insurance for the first time? What are some key pointers they should keep in mind? What are the primary do's and don'ts when selecting the right insurance policy for themselves and their needs?
When selecting a health insurance plan, the first product I'd suggest considering is health insurance itself, especially when you're beginning your journey into financial planning. Firstly, prioritize health insurance as a primary product. Pay attention to the waiting period and any pre-existing conditions you may have. Starting young is advantageous since you likely won't have pre-existing conditions, enabling your health insurance coverage to kick in immediately.
However, if you do have a pre-existing condition, it's imperative to disclose it accurately on the form. Always check the list of cashless networks available and ensure you secure yourself with the appropriate amount of cover. This could involve starting with a base plan and supplementing it with a top-up. Today, the price discrepancy between a 10 lakh sum insured and a one crore cover in health insurance is significant. Contrary to popular belief, a one crore cover won't necessarily cost you ten times more than a 10 lakh cover.
It will only be 20% more expensive, so consider opting for a base plan along with a cost-effective top-up plan. This combination should provide coverage up to 50 lakhs or even one crore. Typically, common illnesses that lead to hospitalization can be managed financially on your own. However, for serious conditions like cancer that demand extensive medical care, expenses can escalate to several lakhs, even up to 20 or 30 lakhs.
That's when insurance truly proves its worth. Consider purchasing a sufficiently large cover, aiming for at least 20 lakhs or, if feasible, up to one crore. You can acquire this coverage either through a standalone base plan or by complementing it with a cost-effective top-up plan. This approach ensures you're adequately protected while managing costs efficiently.
Be sure to personally fill out the proposal form yourself to ensure full disclosure of all relevant information. By doing so, you eliminate any potential issues during the claim process in the future. Relying on someone else to complete the proposal form on your behalf may lead to complications down the line.
Today, there are numerous avenues readily accessible for exploring and purchasing insurance products independently. You can thoroughly review the product, make payments online, ensuring a seamless buying process. This proactive approach guarantees full protection at the claim stage, minimizing any potential issues. For term insurance, adopt a similar strategy: aim to purchase coverage equivalent to 10 times your annual income. For instance, if your income is 10 lakhs, consider acquiring a cover of at least one crore.
This approach essentially secures your family's financial stability by replacing your income in case of your absence. Opt for a straightforward term insurance plan that offers comprehensive coverage in the event of any unfortunate circumstances. Avoid unnecessary add-ons, especially if you already have health insurance coverage.
Invest in a basic vanilla term plan of around one crore for fundamental protection. Additionally, when exploring wealth creation and savings, diversify your investments across fixed asset products, fixed income instruments, and market-linked options. Starting young allows you to take greater equity exposure, potentially up to 70 to 80%. You can allocate your premium accordingly based on this exposure.
When engaging in equity investments, it's advisable to maintain a horizon of at least 10 years. With this timeframe, the likelihood of experiencing losses diminishes significantly, ensuring a more favourable outcome. This approach could serve as a prudent strategy for financial planning.
In your view, what actions can various stakeholders, including government bodies, organizations like Policy Bazaar, and individuals, take to ensure that proper education reaches women? This pertains not only to urban women but also those lacking resources and access to necessary information. How can we include all women in this essential education?
I believe in the power of the internet. Access to data and the ability to consume vast amounts of information online is key. Nowadays, information is accessible in multiple languages, so fluency in English isn't a prerequisite. Education isn't confined to one language anymore. There's an abundance of information out there, and it's our responsibility as organizations to ensure that essential information about products is available in all languages.
Making information widely available on platforms like social media and our own website, where people can come and consume that information, is something we can do. We, of course, operate as a platform where if anybody drops in their phone number, there is a set of advisors, a highly trained workforce, ready to guide and provide the right advice. Moreover, all conversations occur on a recorded line, ensuring there is no scope for misguidance, mis-selling, or providing incorrect information.
I believe enough steps have been taken to ensure that the advice given is sound and genuine, without bias towards any insurance company or particular entity. Having a platform of this sort will definitely be beneficial.
Even though I've joined numerous communities, I've noticed there are many groups dedicated to specific subjects. These communities can be found on platforms like Facebook, Instagram, or even WhatsApp. By participating in these communities, individuals can seek advice and connect with others who share similar interests.
Moreover, it wouldn't hurt to consider reaching out to financial consultants. If you're new to investing or feeling apprehensive despite being financially savvy, seeking professional guidance could provide valuable reassurance.
There are plenty of resources available once you decide to move in that direction. I believe there's ample help accessible on the internet, through social media, and various groups. These resources can assist you in making informed decisions.
On the occasion of International Women's Day, do you have a message/advice that you'd like to share with the young women of India?
One piece of advice I'd offer to women is for women to have confidence in themselves. Taking the first step is crucial. Once you decide to pursue financial independence and make decisions autonomously, that's the most significant stride. The rest, you'll manage to navigate. Stay determined and keep reminding yourself of your capabilities.
