Are financial policies in India truly LGBTQ+-friendly?

Despite insurance policies that claim to benefit the LGBTQ+ community in the country, what does the fine print at the bottom of the document really say?

Ever since the decriminalisation of homosexuality in 2018–when the application of section 377 of the Indian Penal Code was ruled unconstitutional by the Supreme Court of India–there has been a significant emergence of LGBTQ+ individuals in the country demanding equal rights and dignity. This includes recognition and acceptance in the eyes of the law and various aspects of life. The movement for LGBTQ+ rights aims to create a society that embraces diversity and ensures equal opportunities and respect for all individuals, regardless of their sexual orientation or gender identity.

Despite same-sex marriages still not being recognised under the law, some financial institutions have safeguarded the interests of the LGBTQ+ community in their policies, at least in their communication. But do they deliver on their promises?

Reading between the lines

According to the Life Insurance Corporation of India (LIC), there is no legal restriction on designating a same-sex partner as a nominee in insurance policies. This confirmation came in response to an RTI application submitted by Kolkata-based queer couple Suchandra Das and Sree Mukherjee in 2022.

The couple also sought clarity from the Reserve Bank of India (RBI) on whether a nominee in a bank account can be someone not related by birth, marriage, adoption, or consanguinity. While the RBI’s response needs more clarity than that of the LIC, it referred to Sections 45ZA to 45ZF of the Banking Regulations Act, 1949, which addresses nomination-related issues. The RBI stated no conditions or restrictions regarding a nominee’s eligibility. This clarifies that no bank can enforce the requirement of selecting only a relative as a nominee.

However, it is important to note that becoming a nominee while applying for an insurance policy or a bank account does not automatically make the nominee the legal inheritor of the insurance proceeds or funds in the account. The nominee only acts as an authorised person to receive the funds on behalf of the policyholder or account holder. However, to make the nominee the rightful successor, the policyholder or account holder must also execute a registered will, bequeathing the funds accordingly. 

In the case of heterosexual couples, the legal heirs of a married person’s property are determined based on the personal laws applicable to the individual, such as the Hindu Succession Act of 1956, for Hindus. However, same-sex couples are not recognised as spouses under any personal laws in India, and therefore, without a will, they cannot inherit property or wealth. This discriminatory process is relevant to the demand raised by the petitioners in the marriage equality case before the Supreme Court of India (the judgement is currently reserved).

“The biggest problem is nominating your partner who has no validity in the eyes of the law. Also, you cannot file from the same account if you want to apply for a loan or a visa jointly. Both of you have to qualify individually for the loan to make sense, and that causes issues as two separate loans don’t work when you try to buy a property together,” says A, a gay man from Delhi who requested to be quoted anonymously.

These challenges underscore the significance of carefully considering the financial and legal aspects when purchasing a home jointly or planning sponsored travels. As a product consultant at a software company, A has not encountered the need to apply for such situations with a partner thus far. However, in anticipation of potentially entering into a same-sex relationship, he is interested in exploring his options. It is worth noting that all of his current homes have been self-purchased.

Another door closed

Rahul and Ketan, a same-sex couple from Bengaluru, have lived together for 4.5 years. Rahul serves as a team leader at London Stock  Exchange Group (LSEG) for a transcript team, while Ketan works as a Nat Cat modeller at insurance company Swiss Re. They have supported each other throughout their journey, including coming out to their parents and striving for inclusivity in their workplaces.

In a thoughtful gesture, Ketan attempted to register Rahul as a nominee for term insurance as an anniversary gift. Unfortunately, they encountered rejection from one insurance company. However, Ketan remains determined and continues to explore other options, hoping for a positive outcome. They faced this rejection not once but twice in different states.

“Rahul and I went to a bank to open a fixed deposit where I wanted to make Rahul the nominee. However, they did not have an option for that. They said they do not have a provision to put my partner’s name as a spouse under the nominee section. Although the lady at the reception laughed at us, which made us uncomfortable, the manager was understanding and explained we could be given the policy not as ‘spouses’ but as two separate individuals seeking to nominate each other—because their policy did not have a provision that recognised same-sex couples. This incident occurred in Bengaluru,” says Ketan, adding, “I also enquired about a joint account at another bank, and the manager there said they require legal proof that we are a couple. Until we have that proof, we cannot have a joint account as a couple. This incident took place in Noida.” These incidents have led them to reevaluate their approach towards banks and their services.

And this is not surprising. Despite the landmark 2018 ruling by the Supreme Court of India that decriminalised homosexuality, the financial sector has yet to fully embrace the principles outlined in the Yogyakarta Principles, to which India is a signatory. These principles emphasise promoting human rights and integrating a pluralistic approach that recognises and affirms the interrelatedness and indivisibility of all aspects of human identity, including sexual orientation and gender identity (Principle 1, Clause D).

The fine print

When it comes to the recognition of LGBTQ+ relationships, the financial sector in India has lagged behind, placing LGBTQ+ individuals in a difficult position. They are compelled to create individual safety nets, which impose burdens on them that similarly situated heterosexual couples do not encounter. However, like LIC, a few organisations have risen to the occasion. A prominent example is Future Generali India Insurance Company which launched  FG Health Absolute. This groundbreaking health policy redefines the term’ family’ to include the LGBTQIA+ community and live-in partners. They partnered with two well-known same-sex couples, Yogi and Kabeer and Noora and Adhila, to promote their new policy and highlight its coverage for both mental and physical health. The policy offers a substantial sum insured of up to ₹ 1 crore and benefits such as a 15 per cent online discount, flexible premium payment options, restoration of the sum insured, and a 10 per cent family discount for partners under the same policy.

Customers can also enjoy long-term discounts and tax benefits under Section 80D of the Income Tax Act. This initiative by Future Generali is a positive step towards equal access to healthcare for all individuals, regardless of sexual orientation or relationship status. However, it is important to note that the policy excludes gender change treatments and expenses related to sexually transmitted diseases other than HIV/AIDS. This exclusion is ironic considering the policy’s support for LGBTQ+ families, as it leaves out healthcare needs that significantly affect the transgender and gay communities, including syphilis, gonorrhoea, chlamydia, and hepatitis A, B, or C. One can refer to the section on exclusions in the policy for a better understanding. 

Broadening the scope

Moreover, the issue of LGBTQ+ inclusion extends beyond same-sex couples; single LGBTQ+ individuals also suffer from the lack of recognition and support in the financial sector. 

“A lot more can be done. Giving recognition and access to healthcare individually, not just to partners, should be the next logical move. Individuals, including those homeless or exiled from their families and who are queer refugees, need support. Not everyone has a partner,” says B–who requested anonymity–a gay professor at Delhi University who has been in academia for over a decade. He further highlights the need for “LGBTQ+ centres” as safe spaces where queer people can find their voice and come out. “It is a sociological problem, a policy-level problem,” he says, adding, “and unless people have the ability and the courage to recognise their identity and claim their rights, it will be very difficult for them to access any services—financial or otherwise.

“Once in a while, I meet young people, and they seem so confused and can’t even comprehend the idea that they are gay. They can’t even recognise themselves and are too afraid of their families. So, it all comes from a lack of recognition and politics. It is saddening,” says B.

The existing barriers and non-inclusive policies create significant challenges and obstacles for LGBTQ+ individuals, undermining their financial well-being and hindering their access to essential financial services. One example is the denial of spousal benefits due to the non-recognition of LGBTQ+ marriages, which automatically excludes the entire LGBTQ+ community from various family policies. This occurs because the state doesn’t recognise LGBTQ+ families as “families” for the law. As a result, LGBTQ+ individuals may also encounter difficulties securing retirement and social security benefits later in life, particularly spousal benefits, survivor benefits, and other forms of financial support typically available to heterosexual couples. These discriminatory policies compromise their financial security in later years. It is worth noting that a landmark case in the United States, United States v. Windsor addressed some of these issues, including estate tax exemption for surviving spouses in same-sex relationships, highlighting the significance of equal treatment and protection under the law.

However, it should be noted that while discrimination faced by LGBTQ+ individuals in accessing financial services is one aspect, there is also the question of financial institutions’ motivation to expand services to this community.

Who is the real beneficiary?

According to C, who requested anonymity, an individual with 10 years of experience in the banking sector, financial institutions and companies is primarily driven by business decisions and their impact on the bottom line. They may not proactively adopt policies that benefit specific communities without a clear government mandate. The profitability of a net positive value to the company is crucial when implementing any policy.

“LIC’s progressive policy can be attributed to market dynamics. As LIC’s market share has declined, they have adopted new strategies to expand their target segment and mitigate risks. Including LGBTQ+ individuals in their coverage helps them tap into a previously untapped market and enhance their statistics and annual reports,” says C, who adds: “Just as banks have specialised accounts for illiterate or visually-impaired individuals, financial institutions employ various approaches to cater to different communities. However, these decisions ultimately revolve around business considerations, as companies strive to maintain a beneficial bottom line in the long term.” 

This phenomenon, known as “rainbow capitalism” or “pink capitalism”, involves organisations commercialising the LGBTQ+ movement. It is characterised by commodifying LGBTQIA+ people’s needs, desires, and wants, often using rainbow colours or Pride-related themes. This raises questions about the true intent behind LGBTQ+-friendly policies. It may explain why Future Generali, for example, has not included gender-change surgeries in its plan due to cost and the relatively small and underrepresented transgender demographic.

It is important for LGBTQ+ individuals to exercise caution and read the fine print in such policies. The recently concluded discussions around marriage equality before the Supreme Court of India highlight the complexities involved in bringing multiple strands of the law to include LGBTQ+ people, including the implications associated with harmonising ancillary laws related to pensions, insurance, and inheritance. As the country awaits the final verdict from the apex court, it is essential for LGBTQ+ individuals to closely scrutinise insurance policies and be aware of the intricacies, as the devil is often found in the details.

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