National Insurance Awareness Day 2024: Why is insurance necessary for financial security? Know from experts

National Insurance Awareness Day 2024: The low insurance penetration in India is a stark reminder of the vulnerability of millions of Indians to financial burden and crisis in case of untoward incidents like terminal illness, accident, etc. National Insurance Awareness Day, observed every year on June 28, is an opportunity to raise awareness about the importance of taking insurance.

From early adulthood to retirement, the right insurance helps a person secure the future of himself and his family.

According to Casparus Kromhout MD & CEO of Shriram Life Insurance, insurance is crucial not only for personal coverage but also to safeguarding a person's valuable assets like home, car, and business from damage, theft, or liabilities.

“Many insurance products offer tax benefits and can even be used as investment tools. This means that while you're enjoying the protection insurance provides, you can also grow your wealth and make your money work for you,” said Casparus Kromhout.

Why insurance awareness is crucial for financial security?

Insurance awareness is crucial for financial security because of the unfortunate COVID-19, there has been a substantial improvement in awareness. Despite understanding the importance of insurance, people tend to postpone purchasing a policy, often due to misconceptions about the costs or a belief that they can delay it without consequence. This procrastination is a significant reason why insurance penetration rates remain low in India, even though literacy rates are rising. It's essential to not only be aware of insurance but also to recognize its immediate necessity to truly secure one's financial future.

Debunking common myths about insurance

Contrary to popular belief, life insurance doesn't have to be expensive. Premiums can be adjusted to fit different budgets, and options like term insurance offer substantial coverage at affordable rates. You can buy policies for yourself, your spouse, or even your children. Joint policies and child plans provide comprehensive coverage for your loved ones too.

“India, being one of the fastest-growing insurance markets, still has a relatively low insurance penetration rate of 4% of its GDP, leaving a sizable gap. This gap is largely due to a lack of awareness and accessibility of insurance and its critical role in financial stability during unforeseen incidents. On this National Insurance Awareness Day, the industry must spread awareness and work towards closing this gap," said Dhirendra Mahyavanshi, Co-founder and CEO of Turtlemint.

“Being aware about insurance options and regularly reviewing policies are key steps in achieving comprehensive financial security.Adequate insurance coverage protects against unforeseen events, reducing the financial burden caused by accidents, illnesses, natural disasters, or other unexpected circumstances. By keeping updated for various insurance options and encouraging regular policy reviews, individuals can ensure they are adequately protected, thereby safeguarding their financial stability and peace of mind,” said Shashi Kant Dahuja Chief Underwriting Officer, Shriram General Insurance.

“On this National Insurance Awareness Day, we at ManipalCigna Health Insurance emphasize the vital role health insurance plays in securing a healthier future for all. Health insurance is a living benefit product; so just as mutual funds are essential for financial growth, health insurance is crucial to access easy and lifetime quality healthcare without the burden of unforeseen medical expenses. So, everyone should consider the benefits of health insurance and make it a priority,” said Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance.

“In a country like India, where many families lack sufficient financial protection, it is crucial to understand not just the importance of life insurance but also the need for adequate coverage. While it's promising that nearly 70% of families have some form of life insurance, the key question remains: is the coverage adequate? Underinsurance can leave loved ones vulnerable, and the entire insurance ecosystem, led by the regulator, is undertaking numerous measures to ensure that everyone understands the need for the right cover. This Insurance Awareness Day is an opportune time to highlight this critical issue. The general rule of thumb is to secure life cover that is 10 times your annual income,” said Anil PM, Head of Legal, Compliance, and FPU at Bajaj Allianz Life.