India Protection Quotient moves up by 2 points to 37, says Max Life Insurance India Protection Quotient 2.0
New Delhi:Strengthening its commitment towards ensuring greater financial protection for the country, Max Life Insurance Company Ltdtoday unveiled the findings of the second edition of its flagship survey Max Life India Protection Quotient 2.0 in association with KANTAR.
The survey witnessed an increase in India’s levels of term insurance awareness and term insurance ownership and Protection Quotient over the last 12 months.
However, with a movement of 2 points on the Protection Quotient scale from 35 to 37, it indicated that urban India continues to feel financially insecure.
Knowledge Index at 48, increased by 9 points and life insurance ownership increased by 500 bps to 70 per cent from last year. Term insurance ownership increased by 700 bps to 28 per cent whereas term awareness increased 1000 bps to 57 per cent. Knowledge index across cities moved up by at least 6 points and Delhi continues to lead with Protection Quotient of 47.
Bigger in scale and diversity, Max Life India Protection Quotient 2.0, surveyed a total of 7,014 respondents across 25 cities comprising of 6 metros, 9 Tier I and 10 Tier II cities (added in IPQ 2.0), as opposed to the earlier survey which interviewed 4,566 respondents across 15 cities.
While South India continued to outperform other regions with the Protection Quotient of 40 and life insurance ownership of 77 per cent, Western India, saw the most 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 from last year, 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 (1000 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 now has the highest awareness but traditional endowment plans continue to lead in ownership with 600 bps increase to 30 per cent.
Over the year millennial have grown more anxious about financial security with their top anxieties being, day to day medical expenses and sustaining lifestyle and expenses with the current earnings.
When compared, 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.
Speaking at the launch of Max Life Insurance’s IPQ 2.0, Managing Director & CEO Prashant Tripathy said,” The second chapter of our flagship survey, India Protection Quotient 2.0, covers more cities to explore the attitudes and behaviour of a rapidly advancing India, in the backdrop of aspects like technology, health and influence of digital channels of communication.”
Outcomes of IPQ 2.0 give me the confidence that Indian Life Insurance industry is moving in the right direction. Sharp increase in awareness and ownership of life insurance and term insurance can be seen as a precursor to higher protection quotient in the years to come, He added.
The survey also gave the industry some deep insights for future such as the growing reception towards health apps in return for discounted premiums that young India is reflecting preference for, return of premium as the key feature, continued preference for human sellers and growing awareness about insufficiency of cover among other such findings.
Adding to that, Kantar Insights, South Asia Managing Director and CCO Soumya Mohanty 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’re 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.”
Key findings
- 7 in 10 people in India are interested in term plans with return on premium option
- One of the most striking findings of Max Life Insurance’s IPQ 2.0 was that 68 per cent Indians or nearly 7 in every 10 individuals consider return on premium the most important benefit they’d like to have on their term plan.
- At 66 per cent, flexible payment of cover was regarded as the second most important benefit, followed by life stage benefit and flexibility of premium payment, both of which were said to be important benefits as per 65 per cent of the respondents.In addition to that, Term products witness highest rise in awareness and ownership, but only 50 per cent of term plan owners feel their sum assured is sufficient to cover their family in case of uncertainties.
- But most in Tier II cities prefer savings over protection products
- The survey reflected that fewer number of people preferred term products over endowment products in Tier II cities. Focusing on savings over protection, respondents in Tier II citiesshowed a higher percentage of endowment insurance awareness and ownership at 57 per cent and 30 per cent respectively. This hints at an approach which is still conventional when it comes to buying life insurance, and still away from becoming a land of protectors, where securing the financial future of loved ones is yet to take priority.
- Term insurance uptake amongst working women in Tier II continues to be low
- While Life insurance ownership for working women in Tier II cities stood at 60 per cent, term insurance made merely 16 per cent of that. When surveyed with regards to barriers in the way of term insurance purchase, 27 per cent working women non-term owners in Tier II said that they never thought about term insurance at all and 20 per cent said they don’t have enough money to buy it.
- The study further revealed that women, particularly in metros, focused more on returns than on long term financial protection. Critical illness occurrence realization among women also increased over the year, with 16 per cent women realizing that they can fall prey to it as compared to 12 per cent last year. Women also became more aware about critical illness treatment costs in comparison to last year.
- Offline more dominant medium of life insurance search for millennial
- The way young India searches for life insurance information is increasingly changing. The Max Life India Protection Quotient 2.0 revealed that while online medium is the most preferred medium of information search for 33 per cent millennials and 21 per cent non-millennials, offline is the more dominant medium for 67 per cent millennials and 79 per cent non-millennials.
- Even within this group, the ratio of men to women who prefer between online and offline mediums of information is interesting to note. While 27 per cent women searched online in comparison to 29 per cent men.
- Digital India trusts and prefers buying life insurance most from agents
- Despite increasing usage of internet and social media, Indians tend to prefer buying term insurance from agents rather than online with a notable 61 per cent term buyers being nudged by agents first. While 37 per cent of term buyers said they were aware of the product being cheaper online, 68 per cent of them bought term plans from agents, indicating the affinity to face to face contact and human intervention in policy reassurance. While 76 per cent of respondents bought term insurance via agents, 15 per cent through banks and 9 per cent online.
- 33 per cent Indians don’t know that health conditions impact term plan premiums
- As per Max Life India Protection Quotient 2.0, a notable 33 per cent Indians are unaware of health and fitness levels having a direct impact on the premiums paid, while nearly 30 per cent are unaware of the impact of age on premiums and 46 per cent said they are not aware of gender as a factor affecting premiums. While 72 per cent respondents in metro cities were aware of health and fitness as a factor impacting premium, only 59 per cent in Tier II cities were aware of it having an impact. Similarly, while 62 per cent and 77 per cent of respondents in Metros were in the know about gender and age respectively as factors affecting premium, a mere 48 per cent and 65 per cent in Tier II cities knew of the role gender and age play in determining premium.
- Still most would use health apps to get discounted premiums benefit, reflected the survey. 57 per cent Indians said that they would be happy to use health apps if it resulted in discounted premiums. Affluent at 69 per cent were the most receptive to the idea of using health apps followed by men at 58 per cent and millennials at another 58 per cent.
- No change in the adoption of critical illness riders, highest awareness for accidental death benefit rider
- With only 10 per cent term buyers investing in any critical illness rider, IPQ 2.0 survey brought to light that there was no change in the adoption rate of riders to enhance and customize protection coverover the last 12 months. Awareness of critical illness rider was the lowest at 64 per cent, followed by waiver of premium benefit rider at 68 per cent and 70 per cent who were aware of accidental death benefit rider.
- Agents and Brand Goodwill decision drivers
- One of the most important parameters recommended while selecting a life insurance provider is their claims paid ratio. However, IPQ 2.0 brought out a surprising finding where only 41 per cent of the respondents across India considered an insurer’s claims paid ratio when selecting the life insurance company while purchasing a term plan. People across the country gave more importance to agents and brand goodwill while selecting a life insurance provider; reiterating the importance of owning a robust distribution network built on customer centricity and great brand recall.
