Bangalore: Notwithstanding increased savings in bank deposits and post office schemes, Indians are still averse to saving money in life insurance policies, a survey conducted by National Council for Applied Economic Research has found.
Seventy-eight million households in rural India and 31 million in urban India were aware of life insurance but did not possess any policy, the report said on 12 April.
“A misplaced optimism and the ‘nothing will happen to me´ syndrome was a major reason behind several Indian households being reluctant to go in for insurance cover,” said Rajesh Sud, Executive Director Distribution, Max Newyork Life, which commissioned the survey.
The survey, which covered a sample of 63,016 households in 1976 villages and 2,255 urban wards, found that 88% households in urban areas saved their money through various instruments while the proportion in rural areas was 79%.
Bank deposits continued to be the most preferred form of savings with 50.9% of people opting for it. About 36% prefrerred to keep their money at home and just five% deposited in post office. Only 0.1% purchased bonds.
Among the reasons for savings, education and emergency provisioning topped the list with nearly 80% and 82% saving for those purposes.
A total of 62.7% saved for social ceremonies while 22.4% saved for consumer goods, the report said.
The survey, which was conducted during October 2006 to September 2007, found that nearly 20.7% people borrowed money in rural areas while only 7.4% took loans in urban wards.
Fifty-one per cent people took loans for the purchase of consumer durables while 19% borrowed money to meet education expenses. Around 14% households headed to banks to meet their health expenses.
Both Karnataka and Bangalore were above the national average in terms of ownership of life insurance. While 92% households in Karnataka were aware of it, 53% owned it and 75% of Bangalore households owned a policy.
Only 14% female life insurance owners existed as compared to 86% being men, Sud said.