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Life insurance awareness in India does not conform to the set notions and stereotypes. The Pre-launch Survey Report of Insurance Awareness Campaign, 2011 sponsored by IRDA and conducted by NCAER shows that life insurance penetration (% of insurance Premium paid in the GDP of the country) in India is 4.6% as compared to the world average of 4.0%. This means that awareness about life insurance and its benefits in India is comparable to the population of other developed countries.
However, the same report indicates further that life insurance awareness amongst those individuals who do not have a bank account is almost negligible. This is a paradoxical situation where two extremes co-exist within the same life insurance market. The number of persons who are aware of insurance benefits in India is not very high. Yet, those persons who are aware use this option so effectively that the premium to GDP ratio is at par with developed countries.
Insurance penetration has risen from 2.15% in 2001 to 4.6% in 2009 (data for 2010 onwards not being available yet). The urban areas indicate a penetration of 65% while the rural market shows life insurance penetration of just 40%. Considering the fact that a significant percentage of the population continues to live in rural areas, there is a lot of scope for improvement in awareness about life insurance in India.
Awareness about life insurance benefits have improved after private insurers entered the market in a big way. There was a time when people were scared to rely on any Insurer other than Government owned LIC for their life insurance needs. However, the private insurers are nimbler, more aggressive in offering customized solutions, and have contributed to growing awareness about importance of buying life insurance in India. So, learn to look beyond one or two insurance companies.
More than 50% of those who participated in a survey spoke of how life insurance money can be useful during an emergency. However, this popular perception need not be true. A Term Policy will pay immediately upon the death of the life Insured within the time period. However, withdrawing money from an ULIP policy within the lock-in period of three years to meet a financial emergency may just not be possible. Learn more about the types of life insurance solutions available and choose the one that provides maximum benefits.
Insurance benefits go beyond financial security for the family in the event of death of the insured.
-new and dynamic addition to your financial portfolio, and
-an investment that not just matches but beats the market.
Start early to analyze the various options in the market. Keep track of new products and compare them with solutions available earlier. Only then will you be in a position to take sensible insurance decisions for maximum life insurance benefits.
Buying cover is the first step. How much life insurance cover is adequate for your current lifestyle? When should you reconsider your requirements? How often should you determine the ideal amount of life insurance required by your family? Answers to these questions related to life insurance cannot be found by merely theorizing about it.
Increasing awareness and ensuring a large number of people buy adequate life insurance will help rationalize India’s social security mechanism. As on date, 75 persons out of a hundred have absolutely no protection from emergencies and contingencies that are part and parcel of life.