With a waning Covid-19 pandemic inducing optimism, urban Indians have showcased a positive movement to protection both in terms of awareness as well as ownership of life insurance, revealed the latest edition of Max Life Insurance’s India Protection Quotient (IPQ) 5.0.

Max Life Insurance’s India Protection Quotient increased from 39 in 2020 to 43 in the latest survey on the back of a strong show on security levels, which has returned to pre-pandemic levels at 63 per cent in the latest edition. The latest survey had over 4,600 respondents including 1,080 through digital mode.

Commenting on the findings of IPQ 5.0, Prashant Tripathy, Managing Director & CEO, Max Life Insurance said, “This year, we see urban India transition to a more secure space as health anxieties take a backseat. Additionally, while India has begun recognising the real value of term insurance, ownership remains an area of challenge that the life insurance industry will need to work hard to address.”

Tripathy added, “While the current findings of the study instill confidence in India’s trajectory towards financial independence, a challenging journey lies ahead of us, one that will be marked by the lessons of the past as well as insights that will shape the future of the country’s life insurance sector.”

Areas of concern

According to Tripathy, inflation was one of the major concerns before Urban India, but he clarified that it would not negatively affect life insurance demand.

Although tier-1 cities made strides in life insurance ownership, the gap with metros is still sizeable. Awareness of term insurance is at an all-time high of 64 per cent and ownership has grown from 1 in 5 to 1 in 3 in the last five years.

The latest edition of the IPQ survey, conducted in partnership with KANTAR, also revealed that the degree to which urban Indians are aware of life insurance products or the Knowledge Index moved up from 39 (in IPQ 1.0) in 2019 to 57 and life insurance Ownership Levels increased by 800 bps from 2019 (IPQ 1.0) to 73 per cent.

Reprioritising investments

According to IPQ 5.0, with respite from health-related worries, urban India has begun reprioritising investments in savings plans for life insurance showcasing sustained growth in ownership — up from 24 per cent in IPQ 1.0. to 38 per cent in IPQ 5.0, while term plan1 adoption rates have grown ~50 per cent in five years.

On the positive, urban India has made huge strides in Knowledge Index over the past five years. While the survey noted a change from 71 per cent to 73 per cent in life insurance Ownership from IPQ 3.0, the heightened awareness across categories is reflected by improved ownership of products including the term (30 per cent), market-linked (13 per cent), and savings plans (38 per cent).

Also, the South zone celebrates five years of undisputed number one rank in the Protection Quotient. IPQ 5.0 noted a marked increase in Protection Quotient for the South zone from 41 to 47. The West zone stands second with 42 points, followed by the North and East with 40 and 39 respectively.

Understanding behaviour

Tripathy said that Max Life Insurance had initiated the IPQ survey five years ago with the endeavour to understand India’s behaviour and outlook towards financial protection — an important metric in determining the resilience of the nation.

“Since then, the IPQ survey has evolved into a financial health indicator, effectively enabling Max Life and the life insurance sector to uncover the pulse of the nation on financial preparedness,” he added.

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