Indians Feel Financially Unprotected: Max Life Survey

Almost 57% tier 2 cities residents think that their savings will exhaust within 1 year in case of bread winner's death

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About 70 per cent Indians own a life insurance policy, but only about a quarter have a pure life term plan, shows a joint study by Max Life Insurance and Kantar IMRB. Even among the 28 per cent owners of term plans, almost 55 per cent reported an insufficient cover.

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However, the silver lining is that awareness around term insurance plans is higher at 57 per cent. “Increased awareness is followed by action, which means we can expect more individuals to buy term plans in the coming years,” said Prashant Tripathy, Managing Director and CEO, Max Life Insurance, during the event.

Source: Max Life Insurance. + and - represent change compared to IPQ 1.0 released in 2019.

Titled Max Life India Protection Quotient 2.0, the second edition of the survey revealed that the overall India Protection Quotient (IPQ) of Indians stands at 37, having increased by 2 points from last year. Even then, the IPQ is still quite low.

IPQ is the degree to which an individual feels protected from future uncertainties, on a scale of 0 to 100. Developed by Max life with KANTAR, the tool’s main purpose is to assess how protected urban India is. It is based on the attitudes, mental preparedness around future uncertainties, awareness and ownership of life insurance product categories, such as term plan, endowment and ULIP.

IPQ 2.0 was conducted in 25 cities—6 metros, 9 tier 1 and 10 tier 2—and garnered 7,014 respondents.

Tier 2 Cities Least Financially Secured

Delhi and Hyderabad scored the highest on protect quotient with IPQ of 47 and 46, respectively.

Source: Max Life Insurance. + and - represent change compared to IPQ 1.0 released in 2019.

Delhi lead the way even in life insurance awareness (67) but fell behind Mumbai, Bhubaneshwar and Kolkata in ownership. Surprisingly, Bengaluru and Pune, which comprise of highest young working population, fell behind not only in life insurance awareness and ownership but also in IPQ.

Tier 2 cities are most financially vulnerable, having scored the lowest across all three categories.

Source: Max Life Insurance.

In fact, 57 per cent respondents from tier 2 cities reported that their savings will exhaust within 1 year in case of bread winner's death. In comparison, 39 per cent respondents from metro cities feel the same.

Endowment Products Preferred Over Term Plan

Indians prefer savings over protection, says the survey. Perhaps for this reason, almost 68 per cent respondents reported return on premium as the most important benefit they would like in their term plan. It is no surprise then compared to term plan and market linked products (ULIPS), endowment products have maximum takers across the country.

Source: Max Life Insurance.

In terms of age demographic, millennials and non-millennials are equally aware of life insurance products, however ownership is high among non-millennials by 7 per cent. The reason for this could be that a fair share of millennial population (born between 1982 and 1996) is below 30 years and do not have financial dependents.