Only A Few Of India's Population Is Covered Under Life Insurance Plan

 

Amit understood the meaning of life Insurance when his colleague Ajay met with a sudden heart attack and was declared dead when brought to the hospital. Even though Ajay was earning ₹80,000 monthly, he had only one life Insurance policy with life cover of just ₹5,00,000!

Amit could feel that the small amount of ₹5,00,000 was a paltry sum for Ajay’s family and insufficient to meet daily expenses and education of his two kids.

Ajay’s story is very common in our society as people underestimate the importance of life insurance in India. Most people take policies based on the premium amounts – however, you must start by assessing the need of the life insurance plan and future financial objectives.

As per studies, 30 people out of 100 have a life insurance policy in India. According to a TOI article, life insurance coverage in rural India is set at a mere 8-10% and another study by Kantar reveals that coverage in urban India is 78%.

According to the IRDAI Annual Report, insurance density, or, the premium amount spent per person, for life insurance in India has increased from USD 9.1 in 2001-02 to USD 91 in 2021-22 which is still lower than global insurance density of USD 382 (as per the Swiss Re Sigma report).

These figures indicate low life insurance density and coverage in a country with a large population like India. In January 2023, India surpassed China to become the world’s most populous country with a population count of approximately 1.417 billion as against China’s 1.412 billion, as estimated by the World Population Review (WPR). 

There are a number of reasons why so few Indians are covered by life insurance. One of the main reasons is that many people are simply unaware of the benefits of life insurance or do not understand how it works. Some people consider life insurance too complicated to be bought. They may not realize that it can provide financial protection for their families in the event of their unexpected death.

Another reason why so few Indians are covered by life insurance is that it can be expensive, especially for those who have pre-existing health conditions or are considered to be high-risk. Many people may feel that they cannot afford the premiums for a life insurance policy, and so they do not pursue coverage.

In addition, some people may be hesitant to buy life insurance because they do not want to think about their own mortality. It can be difficult to confront the fact that we will all eventually die, and so some people may avoid purchasing life insurance in order to avoid having to think about this reality.

Despite these challenges, it is important for more Indians to consider purchasing a life insurance policy. Death of a close one brings lot of grief to the family with the added financial burden. While, the void left behind cannot be filled, having a financial backup can help them continue their lifestyle as is. It can also provide peace of mind, knowing that our loved ones will be taken care of in the event of our death.

There are a number of different types of life insurance policies available in India, including term insurance, endowment plans, and whole life insurance. It is important to research and compare the different options in order to find the policy that best meets your needs and budget.

In conclusion, while it is encouraging to see that the life insurance penetration rate in India is slowly increasing, there is still a long way to go in terms of ensuring that more Indians are covered by this important financial protection. It is important for more people to educate themselves about the benefits of life insurance and to consider purchasing a policy that meets their needs and budget. By doing so, we can help to ensure that our loved ones are financially protected in the event of our unexpected death.

Ajay’s incidence must have made you realise the need for life insurance plans in India. In a nutshell, life insurance is a must for protecting the financial future of your family.

A life insurance policy promises to pay a lump sum benefit to the extent of sum assured + accrued benefits, if any (as per policy terms), in case of sudden death. This helps the family overcome the financial crisis which arises due to the death of the sole bread earner. While the emotional loss is irreplaceable, the financial loss is compensated by the life insurance company. Thus, a life insurance policy provides financial protection to the family when it is needed the most. This is why your motto should be ‘Sabse Pehle Life Insurance’ when planning your financial roadmap for the future.

The need for life insurance plans: How much life insurance do I need in India?

Within life insurance, there are various plans tailored to meet life goals. Whether you are planning for your child’s higher education, your retirement, wealth creation or protecting your home or personal loan, there is always a life insurance plan tailor-made to meet these goals. Life insurance plays a big role in financial planning as it ensures the future financial goals of the family are met even if the sole bread earner of the family is not around due to his or her sudden demise.

Through term insurance plans you can take a high life cover by paying a small premium. It is generally suggested to have sum assured of 2-3 times your annual salary, for your family to be able to continue similar standard of living in future. However, you may increase or decrease this considering your exact requirement. If you have dependents or financial liabilities, then it is prudent to get life insurance and a term plan is the cheapest variety of life insurance policy available in the market.

Amit overlooked the importance of a term plan but you should take complete responsibility for your family with Life Insurance without any delay.

This will surely give you a sigh of contentment when you are alive and even when you are gone making it a must rather than a choice.

 

Chirag Iyer - BFSI Enthusiast

Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing.