India Protection Quotient (IPQ) survey conducted by Max Life in associate with Kantar IMRB, has found that the birth of a child is the biggest trigger for buying life insurance among urban India.
IPQ survey primarily measured the respondent’s level of knowledge and ownership of various life insurance products, the degree of term insurance preference, their primary fears and triggers to buy life insurance and preferred channel of policy purchase. The survey also looked at roadblocks to owning life insurance policies. Overall Indians have shown a poor IPQ level of 35 when it comes to buying life insurance.
The survey was conducted on 4,566 respondents across 15 urban metro and Tier 1 cities including Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Mumbai, Ludhiana, Jaipur, Lucknow, Patna, Bhubaneshwar, Vishakhapatnam, Ahmedabad, Bhopal, Pune.
The survey further revealed that young Indians feel that they are grossly underprepared when it comes to facing any financial problem but in order to protect the child’s future in case of any eventuality, they tend to buy term plans, a term plan is a plain vanilla product that only charges for the cost of insurance and so is the cheapest way to buy life insurance. Consequently, the survey found that families with children were more aware about term plans.
“The fact that 36% families with children consider term insurance as their first choice when it comes to buying life insurance indicates that millennial parents understand the risks of life and the need to protect against those risks by buying term plan," found the survey. In terms of awareness nearly 52% of the families knew about term plans compared to the awareness levels of 29% among families without children. Consequently, families with children have a higher term insurance ownership of 24%, while only 12% families without children own term insurance," said the survey.
As per the survey awareness of term products is a comparatively higher at 50% among millennial with kids as compared with the national average of 47%.
The survey also finds out that millennial with kids are far more conscious of creating corpus to support life stage goals related to their children. “A significant 79% millennial with kids save for their kid’s education while 55% save for their kids’ marriage," said the survey.
Aalok Bhan, Director and Chief Marketing Officer, Max Life said, “There are several key milestones in parents’ life that they go through which children’s are growing, right from nurturing values, to a good quality education in the early days and then to supporting their higher education and matrimonial plans. To achieve such milestones without any hassles, it is important to undertake financial planning judiciously. It is reassuring to see that young India understands the need for owning term insurance to secure their family’s future. Birth of child is the biggest trigger for millennials to buy term insurance, which confirms that children continues to be the fulcrum of financial planning for Indian households."
While life insurance has traditionally been considered a push product--they are sold and not bought and therefore command a higher incentives--the advent of online term plans have changed this notion completely. While India continues to show a huge protection gap, the fact that millennials families are becoming increasingly aware of the need of buying a term plan is a step in the right direction.