Most Indians are grossly under-insured to face any financial instability. Only two out of 10 people have a term insurance policy, of which more than half do not have any awareness of the sum assured they are guaranteed on the policy. Two-thirds perceive term insurance is relevant only for the breadwinner of the family. These findings are from India Protection Quotient (IPQ), a survey done by Max Life Insurance and market research firm Kantar IMRB.
Lower protection, awareness
The IPQ, a three-dimensional metric to analyse level of life insurance awareness, ownership and mental preparedness around protection, is very low at 35. The study reveals that women are grossly under-protected in the country as only one-third save for future stability. In fact, the savings pattern of working women in metros are more focused on children s education and less on old age security.
Prashant Tripathy, managing director and chief executive officer of Max Life Insurance, says term insurance, despite being the most fundamental and cheapest form of financial protection, still lacks significant uptake in urban India. There is a urgent need for Indians to understand the true value of protecting one s family from the uncertainties of life, he says.
The survey was done amongst 4,566 respondents of different demographics and age groups across 15 metros and tier 1 cities in the country. It found that a low uptake and lack of awareness of term insurance is contributing to an overwhelming number of people feeling under-protected.
Critical illness: The missing link
Most Indians are not prepared to fund expenses for critical illness as only 10% of term insurance policyholders have invested in a critical illness rider. Around 80% are not even aware of the costs of treatment for critical illness such as heart disease or cancer.
State-wise, the IPQ of Delhi is the highest at 46 and the lowest was in Ludhiana at 21. The Capital has the highest awareness of term insurance, Bhubaneshwar has the highest term insurance ownership across all metros and Vizag has the best conversion ratio between life insurance and term insurance. Also, with relatively higher life insurance awareness and ownership, South India feels savings will last longer than that of the rest of India.
Protection not a priority for millennials
Youngsters in the 25-35 age group spend more on luxury items, travel and half of them are not even thinking of protection of their families. However, those with children save for their education and marriage and the primary motivation to buy term insurance is to secure a financial amount for these aspirations in future.