Why urban India continues to feel financially insecure

Awareness of term insurance and ownership has improved in India over the last one year, albeit marginally, going by the latest edition of Max Life Insurance’s survey. This survey — Max Life India Protection Quotient 2.0 — was conducted by the private life insurer in association with KANTAR. The protection quotient scale has improved from 35 to 37, which indicates that urban India continues to feel financially insecure.

Unveiling the findings of the second edition of the survey, Prashant Tripathy, Managing Director and CEO, said this edition had a total of 7,014 respondents across 25 cities comprising 6 metros, 9 Tier I and 10 Tier II cities (added in IPQ 2.0), against the earlier survey (done last year), which interviewed 4,566 respondents across 15 cities. “We have included Tier II cities. The outcome shows that there is some improvement in both awareness and ownership when compared to the findings of last year. There is also increased anxiety among respondents over the need for financial protection. This is expected to translate into increased buying of term insurance at industry level in coming days,” he said.

Millennials

Tripathy said that term-plan ownership was up 700 bps to 28 per cent and seven in 10 people are interested in term plans with return on premium option. As regards millennials, the survey’s findings showed that theyhave caught up with non-millennials on IPQ and term-insurance awareness but lag when it comes to term ownership, he said.

He said that Tier II cities feel less financially protected and have debuted at a Protection Quotient of 32. While South India continued to outperform other regions with a Protection Quotient of 40 and life insurance ownership of 77 per cent, Western Indiasaw the significant growth of 7 points in life insurance ownership at 64 per cent. Delhi and Hyderabad led with the Protection Quotient of 47 and 46, respectively, while Ludhiana, despite witnessing the maximum growth, continued to have the lowest Protection Quotient of 27 this year. Chennai is the only city to witness a decline from last year on the protection quotient.

Term insurance products witnessed the highest rise in awareness (1,000 bps to 57 per cent) and ownership (700 bps to 28 per cent) among different product categories such as market-linked insurance and endowment products and has the highest awareness, but traditional endowment plans continue to lead in ownership with 600 bps increase to 30 per cent. Over the year, millennials have grown more anxious about financial security with their top anxieties beingday-to-day medical expenses and sustaining lifestyle and expenses with the current earnings. Women remained more anxious about financial security than men across several parameters. The survey also revealed that Tier II cities focus more on savings than protection and demonstrated a preference of endowment polices over term insurance.

Soumya Mohanty, Managing Director and CCO, Kantar Insights, South Asia, said: “It has been observed that Indians do not give much thought to this basic element of financial planning due to which awareness level about life insurance products for financial protection is low. Further to an insightful survey conducted last year, we are happy to be associating with Max Life Insurance to uncover prevalent attitudes and behaviour that could help scale the overall adoption of life insurance, thereby building financial security of the nation.”

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