Since November 08, 2016, the nation has been in a tizzy over the Prime Minister’s announcement declaring notes of Rs.500 and Rs1000 as invalid tender. The aftershocks of that announcement were compounded with the government introducing new notes of Rs.500 and Rs.2000. Although the verdict is out as to whether the said move was good or bad, one thing is clear; it will have far-reaching consequences over the country’s economy in the days to follow.
Why was it done?
It was done ostensibly to:
- Counter the menace of counterfeit currency,
- To negate the harmful effects of black money on the nation’s economy,
- To render the money in the hands of terrorists and anti-social elements forcing them to halt their operations, and
- To promote digitisation of the economy and to move it away from the cash-based practices.
What are its effects on the economy?
Because of the announcement, you could see large queues outside banks and ATM’s with common people rushing to exchange & deposit their invalid currency as also withdraw new currency. Businesses were hit because of people being busier in validating the money that they held. The markets went topsy-turvy, but stabilised later at low levels. The best part was that it gave a fillip to the online industry. The online industry, especially those with respect to availing of services, was based mostly on online payment transactions. These increased with people using more of these services. Virtual wallets gained currency as people started making payments and availing of services using online methods.
How was life insurance affected by all this?
Life insurance remained primarily unaffected by all this. This is because most of the life industry transactions are either cheque-based or online payment based. People on the ground now are keen to buy life insurance online as it is easier for them and saves their time. The convenience and ease of buying and paying for a life insurance policy online became a much accepted fact across the spectrum of people. This change is poised to become permanent as even after things settle down on the high denomination currency front, people will realise that it is easier and faster to buy insurance, especially term and critical illness plans online.
The effects of the demonetisation move, as it is being called, will be known by the end of 2016, but the positive effect of the same on online life insurance is clear and evident. Visit www.edelweisstokio.in to know more about attractive online life insurance plans.
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