In a nation where the sense of money is only slowly picking up speed, a startling survey has pulled out the stunning insurance awareness gap. Almost 50% Indians have no idea about term insurance plans, the bedrock of financial security. This finding highlights the requirement for increased education and outreach efforts to close this knowledge gap and encourage wise financial planning.
The survey, highlighted in a recent article in the Financial Express, presents a darker picture. Despite increases in information availability and heightened emphasis on financial literacy, a majority of India’s populace is unaware of the elementary benefits of term insurance. This lack of awareness cuts across all sections of society and is a testament to system failure in the manner in which financial products are viewed and understood.
Understanding Term Insurance
Term insurance is an easy life insurance product that ensures financial security for a term. On the death of the policyholder during the term of the policy, the nominee receives the amount assured. There are no maturity benefits provided by other forms of life insurance products; term plans are thus less expensive and more accessible.
Survey Insights: The Awareness Deficit
The survey conducted by Max Life Insurance in association with KANTAR revealed that while the percentage of life insurance holding among urban Indians is 75%, term insurance holding stands at 31%. This difference reveals a humongous gap between overall life insurance awareness and specific awareness of term plans.
Besides it, the survey also indicated variations at regional levels, as the metro cities were observed with higher levels of awareness in comparison to Tier II and Tier III cities. The rural-urban gradient demands niche level awareness efforts to reach the unreached.
Drivers Behind Low Awareness
There are several factors attributing low awareness and usage of term insurance in India:
Insurance Product Complexity: Insurance product diversity makes it difficult to select for a person willing to buy.
Financial Illiteracy: Financial literacy remains an issue as most people are unaware of the fundamental concepts and principles of insurance benefits.
Cultural Attitudes: Death and financial planning are taboo among certain groups, and thus the topic of life insurance is difficult to talk about.
Misconception regarding Insurance Providers: Prejudices and previous negative experiences lead to suspicion against insurance providers.
Need for Term Insurance
Term insurance is an essential component of individual financial planning and has many advantages:
Affordability: They are cost-effective, providing high coverage at comparatively lower premiums.
Financial Protection: They give financial protection to the family of the policy purchaser in case of an untimely event.
Debt Settlement: The value guaranteed can be used to retire outstanding debts, thus eliminating money burdens on the family.
Emotional Comfort: Knowledge that one’s loved ones are financially free provides emotional satisfaction to policyholders.
Closing the Awareness Gap
To enhance awareness and take up of term insurance, the following can be attempted:
Educational Campaigns: Organizing nation-wide campaigns educating the public on the benefits and necessity of term insurance.
Product Simplification: Creating simple-to-use insurance products with unambiguous terms and conditions.
Harnessing Technology: Spread information through digital media and provide insurance products in an easily accessible manner.
Partnerships: Partner with mass influencers and community groups to achieve mass insurance literacy.
VSRK Capital: Your Financial Planning Partner
At VSRK Capital, we are committed to closing the awareness gap and help you build your financial future. Term insurance, in our view, is not just a product but a very fundamental building block of good financial planning. Our experts can help you to:
Know your insurance needs: We will lead you to select your financial objectives, your dependents’ needs, and your risk appetite.
Choose the right term insurance policy: We will help you compare policies and choose one that offers the best coverage at a low premium.
Understand the terms and conditions of the policy: We will give you simple-to-understand and simple policy information so you can understand your benefits and coverage.
Conclusion
The reality that almost 50% of Indians do not even know about term insurance plans should wake up each one of us in the financial sector. Where education is imparted with great importance, products are simplified so that they become understandable, and technology is tapped into, we can bridge the gap of awareness and bring everybody closer to financial security. At VSRK Capital, we ensure that we take you through every step of your financial journey, ensuring that you and your family members are well protected.
FAQs
Q1: How does term insurance help with long-term financial planning?
Term insurance provides you with a financial cushion to ensure your long-term financial goals are being met even when you are not there. Assume that you are saving for your retirement or for your child’s education. If you die prematurely, a term insurance policy will cover a sum of money to your family so that they can keep on working towards those dreams without the burden of money. It is a foundation upon which your other money plans can be built, and it affords you stability and peace of mind.
Q2: Do I really need term insurance if I’m in good health?
Yes, you do. Good health is never guaranteed. Even as we all hope to live long and healthy, something unexpected may strike. Term insurance isn’t if something is going to happen, but when. It’s an act of prevention to protect your loved ones from the financial effect of an early loss. It’s a seatbelt – you don’t wear it because you’re expecting a collision, but because it’s a necessary precaution in case one does happen. Term insurance gives your family members the same security and financial protection.
