Why do Indians buy less insurance

Life Insurance – The facts

As per Industry estimates, just 3.42% of Indians have a Life Insurance policy. Global average stands at around 6.2%. India constitutes 17% of world population, whereas Indian insurance market is less than 1.5% of total premium collected all over the world. However there are industry estimates that this sectors growth might cross 4% this financial year. Still we are far behind the world when it comes to buying Insurance.

Let me share some facts when it comes to health. As per Global Healthcare ratings, India ranked a lowly 154th out of 195 countries. This list is prepared based on death rates for 32 diseases which can be well controlled with a proper health care system. Some of the top life threatening diseases our country battles today includes heart disease and stroke, Cancer, TB etc. With such a poor ranking in healthcare system, the chances of a person surviving any of the mentioned diseases becomes lean. Above all, roughly 25% of population has access to proper facilities. On an average, around 6 lac people lose their life due to cancer, 2 lac due to TB and deaths related to heart diseases are on a rise. If reports are to be believed, only 20% of the population has a health insurance. Life insurance numbers are already mentioned at the starting of this article. Now when a person gets admitted in a hospital due to any critical illness, his/her medical bills can run in lacs and deplete entire savings. Similarly if the person looses his/her life, it can be traumatic, both mentally and financially. With such low numbers of Insurance penetration, majority of the Indians are vulnerable to financial blows they might get in case of a serious illness.

Coming onto accidents, on an average 400 people died everyday on Indian roads in 2016. Thats a whopping 1.5 lac deaths. Most of the times, it’s the sole bread winner of the family who looses life. This can cripple one’s family. Lack of Insurance cover dents the financial stability and can impact deceased persons family’s future for number of years.

These examples are just the tip of the iceberg. India is a complex and developing country. The human development index is still in nascent stage and most of us risk our lives everyday. If we compare ourselves to US or Canada or other developed countries, our policies are still getting formulated and it would take some more time till we get some robust healthcare system or better infrastructure. Now the question arises, after all this dangers,

Why Indians don’t buy Life Insurance?

This is typically due to lack of education amongst customers. Most of the insurance products are quite tricky to understand and use heavy jargons. Another reason is the rampant misselling that has repelled the users and made them see insurance with suspicion. Also here in India, it’s taboo to speak about death. People really don’t fancy this and avoid discussing about it. They have a misconception that nothing will happen to them. These reasons cumulate and become a reason for not buying insurance.

But, if we talk practicality, insurance is a must must have product. The only financial instrument that assures a better life for your family after your death and a Term plan is like a cherry on cake. With very low premiums and high protection cover, it’s one of the best insurance product a person can buy. Besides this, a good health insurance policy will be handy in handling your medical costs and bills.

PolicyStar highly recommends buying a life insurance as well as a health insurance plan.