In March 2017, the Association of Mutual Funds of India (Amfi) launched a campaign with the tagline Mutual Funds Sahi Hai, which is seen as hugely successful, with more and more people buying funds. The insurance industry has now come up with a similar campaign, Sabse Pehle Life Insurance, with an eye on boosting penetration. Industry body Life Insurance Council announced the campaign last week to increase awareness and help people understand the true purpose of taking life insurance.
Insurance penetration in India continues to be one of the lowest globally at 3.69%, according to the FY18 annual report of Insurance Regulatory and Development Authority of India (Irdai). Between FY15 and FY17, life insurance penetration in the country was a flat 2.7%. The complex nature of the product with a host of terms and conditions is one of the biggest reasons why the product is not bought in large numbers.
In a press release announcing the launch of this campaign, V. Manickam, secretary, Life Insurance Council, said the slogan Sabse Pehle Life Insurance comes from the cultural nuance in India where the elders have always stressed on giving what’s most essential the top-most priority. “When launched, the campaign will use a combination of advertising, media coverage, on-ground activation, and digital and social media initiatives to ensure extensive outreach. The slogan is being presented in all major Indian languages such as Tamil, Telugu, Kannada, Malayalam, and Bengali which will help increase its visibility and bring recall value," Manickam told Mint.
The task ahead
The council will have to take up various measures to increase awareness about the product. “The main challenge is in making people aware why it is a must to have life insurance policy. It needs to be highlighted that life insurance is the only way to ensure your family is financially secure and protected in case of any eventuality," said Rakesh Goyal, director, Probus Insurance, an insurance broker. We need products with more clarity in policy wordings and a simple purchase process, he added.
Goyal said the need for taking term plans need to be brought to the forefront the same way motor insurance is. With the implementation of the amendments to the Motor Vehicles Act, not having a motor insurance can attract a hefty penalty.
A term plan is a pure life cover which provides coverage for a defined period of time. It is the cheapest form of life insurance as it doesn’t double up as an investment product. In case the policyholder dies before the plan expires, the nominee gets the death benefit.
People are becoming aware about health insurance too because of rising healthcare costs. “Life insurance still hasn’t got the attention it deserves," said Goyal.
One of the biggest problems is the fact that people look at life insurance only as a tax-saving tool rather than a protection plan. Vishal Dhawan, certified financial planner and founder of Plan Ahead Wealth Advisors, said another reason why life insurance penetration is low is due to the lack of willingness to buy or invest in something with a long-term perspective.
With this campaign, the council has an opportunity to segregate life insurance products based on protection and protection-cum-investment products. “The council should encourage simple documents explaining benefits and risks in significantly legible font size similar to the ones that come with credit cards where all terms and conditions are stated clearly. A significant push towards using life insurance as a pure protection plan is a good first step," said Dhawan.
Goyal said the fact that a similar campaign (Mutual Funds Sahi Hai) has gained massive popularity for another financial product is a sign that such campaigns are a great initiative and a sure way to reach out to people.
Amol Joshi, founder, PlanRupee Investment Services agreed, saying the Amfi campaign over the last couple of years has helped deepen the acceptance of mutual funds as investment products; so a similar campaign for life insurance could help increase life insurance penetration. “Mutual funds have now become synonymous with SIP (systematic investment plan). I’ve heard people saying they don’t want to invest in mutual funds but want to invest in SIPs without realizing that SIPs is only a medium of investing in mutual funds. But still, it’s pushing people to invest. Insurance industry needs a similar template and they can achieve this by starting with term plans," said Joshi.
With life insurance products easily available from 24 insurance companies, it is not the availability but the lack of awareness that is a problem. “Through this campaign slogan, we hope that Indians understand the essentiality of life insurance in their lives and opt to first build this shield of protection by securing their financial future and then build a robust financial plan," said Manickam.
There’s low financial literacy about the benefits of protection-focused insurance plans, said Dhawan. The lengthy paperwork is also a huge deterrent, he added.
Term insurance is a must-have cover for anyone who has financial dependants. It secures your family at minimal cost.