Most Indians Rely On Term Insurance Offered By Employer: Survey
The downside of falling back solely on insurance offered by employers is that if you decide to switch jobs, the plan may not be portable
Even as awareness around the need for term insurance is increasing among urban Indians, majority salaried individuals continue to rely heavily on group term life (GTL) plans offered by their employers. Life insurance ownership levels of GTL group stands at 86 per cent, shows a report released by Max Life India in partnership with KANTAR.
The downside of falling back solely on insurance offered by employers is that if you decide to switch jobs, the plan may not be portable. Besides, the cover offered by the GTL plan may not be sufficient for your family's needs. The report corroborates this concern of insured's as nearly 43 per cent group term owners felt their group term life insurance cover (offered by the employer) was not sufficient.
However, on the upside, GTL insurance owners displayed a higher protection index of 49 in comparison to salaried non GTL owners at 38, as per the Max Life India Protection Quotient 3.0 report.
Protection index is the degree to which an individual feels protected from future uncertainties, on a scale of 0 to 100, based on the attitudes, mental preparedness around future uncertainties, awareness and ownership of life insurance product categories.
Insurance Offered by Employer Important Factor When Choosing a Job
With increasing awareness around term insurance, for a majority Indians life insurance cover being offered by an employer has become a crucial determinant of the decision on their employment with a company. Around 65 per cent GTL owner respondents said they consider life insurance cover being offered by the employer an important factor to decide taking an employment offer in a company.
Moreover, 56 per cent salaried group term life cover owners and 53 per cent salaried non GTL cover owners said employers should offer life insurance advice to plan personal finances better, the report shows.
"The insights also point towards the need for employers to assume a key role in helping their employees build long-term financial resilience over the course of their employment," said Aalok Bhan, director and chief marketing officer, Max Life Insurance, in a company statement. "Faced with the possibility of a job loss, income decline and potential loss of health care, the COVID-19 pandemic heightened employees' financial vulnerabilities."
In the backdrop of COVID-19, the report also shows a notable increase in penetration of insurance. Term insurance ownership increased from 26 per cent to 28 per cent for salaried respondents and from 24 per cent to 31 per cent for self-employed.
The study was conducted in top 25 metros, tier I and tier II cities during November-December, and 1,136 salaried non-group term life owners and 358 group term life owners participated.