- Country’s term insurance uptake at a poor 21%, levels of awareness low; reveals survey
- Delhi highest on protection quotient, South and East India lead term insurance adoption, as per survey findings
- For more than 50% of urban Indians the biggest fears related to the demise of the breadwinner are financial insecurity, according to the survey
- India Protection Quotient, a three dimensional metric to analyse level of life insurance awareness, ownership and mental preparedness around protection
Max Life Insurance, one of India’s leading private life insurers, has revealed that Indians are grossly underprepared to cope with the financial instability caused by life events. As per their survey titled ‘India Protection Quotient (IPQ)’, urban India stands at a poor Protection Quotient of 35 on a scale of 1-100. Conducted in association with Kantar IMRB, the survey employed a three dimensional approach to determining policyholders’ level of protection, by evaluating their life insurance ownership, awareness levels and mental preparedness around protection.
It was administered to 4,566 respondents, of different demographics and age groups across 15 metropolitan and tier 1 cities in India. The survey divulges some thought-provoking findings about the state of financial protection in the country as well as the triggers that determine people’s attitudes, behaviors and apprehensions towards life insurance. Term Insurance, despite being the most fundamental and cheapest form of financial protection, still lacks a significant uptake in urban India.
Prashant Tripathy, Managing Director and CEO, Max Life Insurance said: “There is a pressing need for Indians to recognize the true value of safeguarding one’s family from the uncertainties of life. We expect the results of this study to act as a wake-up call for consumers and the industry at large, thereby helping improve financial protection in the country.”
Speaking on the findings of the India Protection Quotient, Soumya Mohanty, Chief Client Officer, Kantar IMRB said: “The India Protection Quotient is a survey that has uncovered some deep insights on the attitudes, preferences, challenges and concerns of urban Indians towards life insurance and protection. In a country that is evolving each day, the research specifically focuses on demographic and geographic cohorts such as Millennials, women and youth, that reflect how various members of society approach protection.”
While 65% of respondents own life insurance, the percentage of term insurance owners was a paltry 21%
A low uptake coupled with lack of awareness of term insurance, which is designed to offer financial protection to policyholders, is contributing to an overwhelming number of people feeling under protected, the survey found.
It was revealed that while 65% of respondents owned life insurance the percentage of term insurance owners was a paltry 21%. Of those who own term insurance, as high as 57% do not have any awareness of the sum assured they’re guaranteed on their policy. Additionally, 70% perceive that term insurance is relevant only for the breadwinner of the family.
More than half of the respondents (53%) surveyed feel that their cover is insufficient. The inadequacy of protection is also felt by the fact that only 1 in 10 term buyers are invested in any critical illness rider. Additionally, 80% of urban Indians are not even aware of the cost of treatments of critical illnesses.
For more than 50% of urban India, threat to financial security and inability to sustain current lifestyle among the utmost fears
For more than 50% of urban Indian the biggest fears related to the demise of the breadwinner are financial insecurity and impact on their current lifestyle, the survey revealed. The threat perception gets further increased due to a feeling of inadequacy of funds. More than a one third (36%) of urban Indians feel that their savings would last less than a year if critical illness or death was to befall. More than one fifth of the population feels they have no one to support them in the event of critical illness or death.
Faith in divine holding India back
In Indian metros, over one fifth (21%) do not like to think of death, it is still considered a taboo even among the educated urban Indian.
Only 1 in 10 term buyers invested in any critical illness rider, underprepared to battle a health crisis
The cost of Critical Illness is also underestimated, and India, at large is underprepared to battle a health crisis, the survey brought to light. Only 10% term buyers are invested in any critical illness rider; and over 80% aren’t even aware of the costs of treatment for critical illnesses like heart disease or cancer. 21% believe there will be no one to support them financially if they were to be diagnosed with a critical illness. 80% are not even aware of the treatment costs of diseases. Only 12% realized that critical illness can prey upon the family, whereas 42% have not even thought about it.
Delhi highest on protection quotient, South and East India lead term insurance adoption
Delhi was discovered to be the city that feels most protected with IPQ of 46, and Ludhiana at 21 ranked the lowest in the India Protection Quotient. Delhi also has the highest awareness of term insurance. Bhubaneshwar has the highest term ownership across all metros and tier I towns and Vizag has the best conversion ratio between life insurance to term insurance. With relatively higher life insurance awareness and ownership, South India feels savings will last longer than that of the rest of India. East is the lowest on that parameter.
With only 33% women saving for future stability, women are grossly under protected in India
With 42% of their earnings being diverted to basic expenses as against working males in metros who spend 38% of their earnings to basic expenses, working women in metros tend to spend less on savings and investments. The savings objectives of working women in metros are more focused on saving for kids’ education and less on old age security and untimely death of a breadwinner (only 33% saved for this).
The ownership of life insurance and term insurance is also lower in females as compared to males. 59% of women in urban India own life insurance policies with only 19% owning term policies.
Millennials prioritize luxury and travel, financial security takes a backseat
Urban Indian Millennials in the age group of 25 – 35 years are seen to spend on travel, luxury, with nearly 43% not even thinking of protection of their families.
Millennials with kids, however, save more for their children’s education and marriage and the primary motivation to buy term insurance is to secure a financial amount for these aspirations in future. When compared to the rest of the demographics, Millennials with kids have an overall greater term insurance awareness and subsequent ownership of 22% as against a general level of 21%.
Indian youth and affluent prioritize travel and luxury over financial protection and retirement
The survey found that young and the affluent do not prioritize protection. In comparison to the elder counterparts, urban youth spends more on luxury items like buying a car, house, holidays as against protection, saving for retirement or child marriage, the affluent class directed its wealth towards investments and savings. Only 44% of youth are aware of term insurance and just 17% own it. It was found that an alarming 22% of urban Indian youth do not even consider buying a life insurance policy due to other investments that they have.
Urban Indians still show a preference to purchase life insurance from agent advisors
Indians tend to buy term insurance from agents rather than directly from the insurers. 79% of urban Indians would prefer to buy life insurance from agent advisors and another 15% from their banks. 94% of those surveyed bought term plans from the agent or the bank. The survey highlights that females, non-graduates and those from Tier 1 are more likely to approach a bank or an agent. More than 50% also stated that a key trigger to buy a term insurance plan was an initial approach by an agent.
About India Protection Quotient (www.maxlifeipq.com)
The India Protection Quotient is an initiative by the Max Life Insurance and Kantar IMRB that primarily measures the level of knowledge and ownership of various life insurance products, degree of term insurance preference and penetration, primary fears and triggers to life insurance purchase, the preferred channel of policy purchase and roadblocks to owning life insurance.
- The study is conducted in top 15 urban metros and Tier 1 cities; hence, its findings are representative of metros and Tier 1 cities of urban India only.
- Tier 1 – Ludhiana, Jaipur, Lucknow, Patna, Bhubaneshwar, Vishakhapatnam, Ahmedabad, Bhopal, Pune
- Metro – Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Mumbai
- The minimum sample to conclude any findings of the study is 270 with an error margin of +- 5.964%.
More on India Protection Quotient – maxlifeipq.com
About Max Life Insurance (www.maxlifeinsurance.com)
Max Life Insurance, one of the leading life insurers in India, is a joint venture between Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Max Financial Services Ltd. is a part of the Max group, which is a leading Indian multi-business corporation, while Mitsui Sumitomo Insurance is a member of MS&AD Insurance group, which is amongst the leading insurers in the world. Max Life Insurance has a vision to be the most admired life insurance company by securing the financial future of its customers.
Max Life Insurance offers comprehensive long term savings, protection and retirement solutions through its high quality agency distribution and multi-channel distribution partners. A financially stable company with a strong track record over the last 18 years, Max Life Insurance offers superior investment expertise. The company has a strong customer-centric approach focused on need-based sales and quality service delivered through its superior human capital.
During the financial year 2017-18, Max Life Insurance achieved gross written premium of Rs. 12,501 crore and had sum assured in force of Rs. 5,11,541 Crore. As on 31st March 2018, the Company had Rs. 52,237 crore of assets under management (AUM) and a share capital including reserves and surplus of Rs. 2,689 crore. The Company has more than 32 lakh customers serviced by its 10,226 employees and 54,791 agent advisors through 210 offices across the country.
About Kantar IMRB
Kantar IMRB is a pioneer of market research services in Asia. With over 40 years of emerging market expertise, it builds customised solutions to create powerful growth paths for its client’s. Kantar IMRB offers unparalleled depth and width of services across sectors & categories by crafting unique solutions and/or leveraging Kantar TNS’s global solutions. The company also has rich data assets in its large array of syndicated studies and data alliance partnerships. With its multidisciplinary and multi-cultural workforce, Kantar IMRB is at the cutting edge of market research and consulting services.