Urban India has shown progress in financial readiness, with 3 out of 4 urban Indians now owning life insurance products. However, their financial security levels are yet to recover to pre-Covid levels, according to Max Life Insurance’s ‘India Protection Quotient (IPQ)’ survey.

The sixth edition of the IPQ survey, or IPQ 6.0, was conducted in partnership with marketing data and analytics company Kantar. It covered 4,700 respondents across 25 Indian cities and surveyed urban India’s pulse on financial protection.

The Protection Index touched an all-time high of 45, up from 43 in the previous survey and 35 in the first survey five years ago. The Knowledge Index increased to 61 from 57, whereas life insurance ownership levels improved to 75 from 73 in the previous year.

“Today, we are witnessing a remarkable shift in the financial consciousness of this diverse group, with 3 out of 4 urban Indians now owning life insurance. This opens opportunity areas for us in the space of digital transformation, creating tailored products, and building greater awareness initiatives that will help ensure an even larger insurance penetration in the country,” said MD and CEO Prashant Tripathy.

Top concern

Rising medical expenses emerged as the top concern among urban Indians, with nearly two-thirds of the population expressing significant apprehensions. Despite growing focus on attaining a financially stable retired life, saving for retirement takes a back seat as urban Indians prioritise other savings goals like children’s education and marriage.

“Despite a modest increase from 63 per cent in IPQ 5.0 to 65 per cent in IPQ 6.0, urban Indians’ financial security levels have yet to fully recover to pre-pandemic levels,” the survey said. It added that metro cities are approaching the 50-point milestone this year, with a protection quotient of 49 points, followed by tier-I cities at 45 points. However, life insurance ownership and adoption in Tier II cities remain stagnant, with IPQ lagging at 36 points.

Widening gap

“This disparity underscores the ongoing challenge of promoting life insurance awareness and accessibility in smaller urban centers, highlighting the need for targeted interventions to address barriers to financial pliability,” the note said.

Despite heightened awareness about term plans, from 64 per cent in IPQ 5.0 to 70 per cent in IPQ 6.0, term insurance ownership has seen negligible improvement to 31 per cent from 30 per cent. The widened gap between ownership and awareness of term insurance products reflects shifting savings priorities.

The survey showed 4 out of 10 urban Indians own one or more savings products, whereas preference for ULIPs remains low at 14 per cent ownership levels. It has also been seen that urban Indians assign higher importance to coverage and riders while buying term insurance, while the priority assigned to premiums has diminished. Moreover, 1 out of 4 Indians prefers health insurance over life insurance, underscoring the value ascribed to health by Indians.

In line with previous findings, South India remained the most financially protected zone with a Protection Quotient of 49 points. West India showed a marked improvement in financial preparedness from 42 points in IPQ 5.0 to 46 points in IPQ 6.0. The North and East zones lagged in financial protection at 41 and 40 points, respectively.

In terms of age group, millennials closely trailed older age groups in financial preparedness, scoring 45 against 46 for non-millennials. ‘Gen Z’ was the least financially shielded with a Protection Quotient of 42 points, largely due to lower insurance ownership. The protection quotient for working women surged to 47 points, aligning with their male counterparts, with 8 out of 10 working women now investing in life insurance.

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