India pegged at a poor life insurance Protection Quotient


New Delhi : Indians feel grossly under-prepared to face the financial instability caused by eventualities of life, first India Protection Quotient (IPQ) unveiled by Max Life Insurance here today revealed.

As per the survey conducted by Max Life and Kantar IMRB, urban India stands at the Protection Quotient of 35 out of 100.

India Protection Quotient (IPQ) is a survey conducted by Max Life and Kantar IMRB that employs a three dimensional approach to determining policyholders’ level of protection, by evaluating their life insurance ownership, awareness levels and mental preparedness around protection.

With a sample size of 4,566 respondents, the survey was administered to respondents of different demographics and age groups across 15 metropolitan and tier 1 cities in India.

The survey primarily measured their level of knowledge and ownership of various life insurance products, degree of term insurance preference and penetration, primary fears and triggers to life insurance purchase, preferred channel of policy purchase, roadblocks to owning life insurance that served to validate the overall IPQ level pegged at a poor 35.

Prashant Tripathy, Managing Director and CEO, Max Life Insurance said: “The survey reveals some interesting and startling findings about the state of protection in the country as well as the attitudes, behaviours and apprehensions that people have around life insurance.

Term Insurance, despite being the most fundamental and cheapest form of financial protection, still lacks a significant uptake in urban India. There is an urgent need for Indians to understand the true value of protecting one’s family from the uncertainties of life. We hope the results of this study, act as a wake-up call for consumers and the industry at large and help increase financial protection in the country, he added.

Speaking on the findings of the India Protection Quotient, Kantar IMRB Chief Client Officer Soumya Mohanty said, “The India Protection Quotient is a survey that has uncovered some deep insights on the attitudes, preferences, challenges and concerns of urban Indians towards life insurance and protection. In a country that is evolving each day, the research specifically focuses on demographic and geographic cohorts such as Millennials, women and youth, that reflect how various members of society approach protection.”

While two third of urban India owns life insurance, only one fifth of them own term insurance and close to 53% are unaware of term insurance and its benefits
The survey found that a low uptake coupled with lack of awareness of term insurance, which is designed to offer financial protection to policyholders, is contributing to an overwhelming number of people feeling under protected.

It was revealed that while 65% of respondents owned life insurance the percentage of term insurance owners was a paltry 21%. Of those who own term insurance, as high as 57% do not have any awareness of the sum assured they’re guaranteed on their policy. Additionally, 70% perceive that term insurance is relevant only for the breadwinner of the family.

More than half of the respondents (53%) surveyed feel that their cover is insufficient. The inadequacy of protection is also felt by the fact that only 1 in 10 term buyers are invested in any critical illness rider. Additionally, 80% of urban Indians are not even aware of the cost of treatments of critical illnesses.

The survey revealed that for more than 50% of urban Indian the biggest fears related to the demise of the breadwinner are financial insecurity and impact on their current lifestyle.
The threat perception gets further increased due to a feeling of inadequacy of funds. More than a one third of urban Indians feel that their savings would last less than a year if critical illness or death was to befall. More than one fifth of the population feels they have no one to support them in the event of critical illness or death.

The survey brought to light that India underestimates the cost of Critical Illness and is under-prepared to battle a health crisis. Only 10 per cent term buyers are invested in any critical illness rider; and over 80% aren’t even aware of the costs of treatment for critical illnesses like heart disease or cancer.

Twenty one per cent believe there will be no one to support them financially if they were to be diagnosed with a critical illness. 80 per cent are not even aware of the treatment costs of diseases. Only 12 per cent realized that critical illness can prey upon the family, whereas 42 per cent have not even thought about it.

With IPQ of 46, Delhi was discovered to be the city that feels most protected and Ludhiana at 21 ranked the lowest in the India Protection Quotient.

Delhi also has the highest awareness of term insurance. Bhubaneshwar has the highest term ownership across all metros and tier I towns and Vizag has the best conversion ratio between life insurance to term insurance. With relatively higher life insurance awareness and ownership, South India feels savings will last longer than that of the rest of India. East is the lowest on that parameter.

With 42 per cent of their earnings being diverted to basic expenses as against working males in metros who spend 38 per cent of their earnings to basic expenses, working women in metros tend to spend less on savings and investments. The savings objectives of working women in metros are more focused on saving for kids’ education and less on old age security and untimely death of a breadwinner.

The ownership of life insurance and term insurance is also lower in females as compared to males. 59 per cent of women in urban India own life insurance policies with only 19 per cent owning term policies.

Urban Indian Millennial in the age group of 25 – 35 years are seen to spend on travel, luxury, with nearly 43 per cent not even thinking of protection of their families.

Millennial with kids however, save more for their children’s education and marriage and the primary motivation to buy term insurance is to secure a financial amount for these aspirations in future. When compared to the rest of the demographics, Millennial with kids have an overall greater term insurance awareness and subsequent ownership of 22 per cent as against a general level of 21 per cent.

Indian youth and affluent prioritize travel and luxury over financial protection and retirement.

The survey found that young and the affluent do not prioritize protection. In comparison to the elder counterparts, urban youth spends more on luxury items like buying a car, house, holidays as against protection, saving for retirement or child marriage, the affluent class directed its wealth towards investments and savings.

Only 44 per cent of youth are aware of term insurance and just 17 per cent own it. It was found that an alarming 22 per cent of urban Indian youth do not even consider buying a life insurance policy due to other investments that they have.

Death is still a taboo even among the educated urban Indian, where over one fifth , do not like to think of death.

Indians tend to buy term insurance from agents rather than directly from the insurers. 79 per cent of urban Indians would prefer to buy life insurance from agent advisors and another 15 per cent from their banks.

Ninety four per cent of those surveyed bought term plans from the agent or the bank. The survey highlights that females, non-graduates and those from non-metros are more likely to approach a bank or an agent. More than 50 per cent also stated that a key trigger to buy a term insurance plan was an initial approach by an agent.


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