NEW DELHI: Close to 65% of urban Indians have purchased a life insurance policy, but only one out of five people has bought term insurance so the level of protection is very low. A study conducted by Max Life Insurance and market research firm Kantar IMRB says that the overall India Potection Quotient (IPQ) stands at 35, which is quite low.
The IPQ is the degree to which an individual feels protected from uncertainties on a scale of 0 to 100. The proprietary tool developed by Max Life Insurance with Kantar IMRB is based on among other things the awareness and ownership of life insurance, level of preparedness for future uncertainties and the degree of preference for pure protection plans.
The study looked at 4,566 respondents aged 25-55 years in 15 top cities in India. “It reveals some startling findings about the state of protection in the country and the attitudes and apprehensions people have about life insurance,” said Prashant Tripathy, Managing Director and CEO of Max Life Insurance.
Term insurance, despite being the most fundamental and cheapest form of financial protection, still lacks a significant uptake in urban India, Tripathy said while releasing the survey. So, there is an urgent need for Indians to understand the true value of protecting one’s family from the uncertainties of life, he added. “We hope the results of this study, act as a wake-up call for consumers and the industry at large and help increase financial protection in the country,” he said.
Delhi scored highest on the protection quotient, followed by Hyderabad and Ahmedabad. Surprisingly, metros such as Pune and Bangalore, which have a very high percentage of millennials and highly educated professionals, were among the lowest scorers. “This indicates that being tech savvy or having access to information alone does not help. One needs to have the right attitude to buy protection,” said Tripathy.
The study found that millennials in the age group of 25-35 years like to spend on travel and luxury but very few think about protecting their families against financial hardships in case of early death. Only 44% of them were aware of term insurance and just 17% had bought it. An alarming 22% of urban Indian youth do not even consider buying a life insurance policy because they have other investments.
This tends to change when millennials become parents. Millennials with kids 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%.