According to the IMF World Economic Outlook, India is the 5th fastest growing nation in the world. Currently, the country’s Gross Domestic Product (GDP) is at a whopping 11.72%. However, despite the country’s rapid growth, insurance penetration in the country rose from 2.71% in 2001 to just 3.69% in 2017. This shows a growth rate of less than 1 percentage point in over 15 years. While these statistics reflect poorly on India’s life insurance market, it would be amiss not to mention that India’s life insurance penetration galloped from 2.15% in 2001 to 4.60% by 2009.
In isolation, it may appear that India’s insurance market is doing fairly well, but when compared to global average, we start to fall behind. Our insurance density in 2016-2017 was just USD 59.7. During the same time span, it was USD 452.2 in Malaysia, USD 323.4 in Thailand and USD 337.1 in China. So, why is India lacking in this department?
The most prominent problem that people in India are facing is the lack of awareness. Most individuals aren’t fully aware of what life insurance is or how and why it can help them. While motor insurance policies are mandatory by law, and health insurance policies can help take care of heavy hospital bills, the immediate benefit of a life insurance policy is difficult for many to understand.
The Importance of Life Insurance
There are a number of places where insurance can come in handy. Let’s take a look at the most important reasons why individuals should purchase a policy:
- For their family’s financial security
- For peace of mind
- To avoid leaving behind a legacy of debt
- To maintain your family’s standard of living in your absence
- To protect your family from the financial implications of death
- To safeguard your own financial future
While a regular life insurance policy or term plan will only benefit your loved ones, a Unit-Linked Insurance Policy (ULIP) provides individuals with the opportunity to invest their money, while also enjoying insurance cover. ULIP plans have higher premiums than regular policies, but they also bring you very high returns and a part of the premium you pay will be invested in various market instruments. The money you earn from this investment can then be used to help you achieve your long-term financial goals. There are a number of ULIP benefits, but the most important one is that it provides the policyholder with life cover, while also allowing them to choose where they would like to invest their money for the future.
Given the many benefits of life insurance and ULIPs in particular, it’s time for Indians to educate themselves on the importance of having an insurance policy. If the idea of a ULIP interests you, you can know more about them on the Finserv Markets website.
Finserv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment, and exclusive EMI store, all under one roof- anytime, anywhere!