It is quite evident that India for long has remained under-insured and the awareness around insurance has been left even further behind. The extent of misunderstanding and lack of awareness amongst consumers, as well as their approach to the insurance buying experience, is quite significant. On the occasion of National Insurance Awareness Day, we at PolicyBazaar.com surveyed 5,600 existing insurance buyers to capture their attitude, perception, and behaviour towards insurance. The overall results show India still buys insurance for "tax-saving" and "investment", however, the country is slowly recognizing that insurance means “protection".
On the deeper understanding of popular products such as term life insurance, health insurance, and motor insurance, the overall awareness is on a rise, as India has started to research more in-depth, seeing insurance as an important purchase that requires personal attention.
Health Insurance Findings
A whopping 98% of those surveyed purchased health insurance remains financial protection against medical expenses, even as 24% gave additional weightage to a combination of factors that include tax saving, personal events such as marriage, birth of child etc.
45% of participants were convinced that the employer provided cover is not enough to adequately cover their health needs, even as a large percentage continues to be unsure or thinks that it's enough to protect them the lifetime.
Nearly 40% of those surveyed consider Claim Settlement Ratio as the biggest pull for them to choose a health insurer, followed by the network of hospitals, brand name, and recommendation by family and friends.
More than 1/4th of respondents considered medical inflation as the most important factor while choosing the amount of cover, followed by the number of people covered under the policy (19%), and their family medical history (9%). Around 44% participants considered a combination of these three factors to choose the sum insured.
The overall trends with health insurance buying clearly depict how people are more aware of the importance of an adequate health cover and they are buying it for the right reasons.
Life Insurance Findings
Nearly 6 out of 10 participants bought term life insurance for "financial protection", and around 38% of participants bought the cover for a combination of reasons, that included financially securing themselves, their families and tax saving.
Most of the participants are not aware of how to choose the right life cover for themselves. The responses were fragmented, as 1/3rd of those surveyed believed that the sum assured should be in the range of 10-20 times of their annual income.
Nearly 5 out of 10 participants were aware that term life insurance results in no payment if the individual survives the term, even as 30% responded showed ignorance to if the payout will happen or not.
The survey also indicated that 4 out of 10 respondents bought a term cover, which provided them financial protection until they retired or were completely free of their financial obligations/liabilities. Furthermore, the survey revealed that nearly 1/3rd consumers purchased term insurance for the term, which equaled their duration of earning days.
With respect to the findings of the survey, we can conclude the following:
Even though majority of consumers are buying life insurance for creating a safety net for their families by ensuring financial protection, they were not necessarily aware as to how they can determine their correct sum assured size.
Motor Insurance Findings
Nearly 7 out of 10 motor insurance consumers bought insurance for twin reasons of motor insurance is mandatory for vehicle owners and also because it affords protection financial loss attributed to damage or theft of the vehicle. Whereas, 1/3rd of the respondents had bought motor insurance keeping third-party liability in mind. The survey also revealed that 6 out of 10 respondents were aware that lapsed motor insurance can be renewed online, while 4 out of 10 were not aware about it or unsure of the fact that lapsed insurance can be renewed online.
5 out of 10 consumers were found to be aware that third-party cover is mandatory by law. While a meager 4% of the consumers responded that own damage cover is a mandatory requirement for car insurance, even though it is not. Whereas a whopping 45% believed third-party and own damage cover to be mandatory.
6 out of 10 consumers or 3/5th were aware of the benefits one can get as part of third-party motor insurance cover. Furthermore, 1/3rd of the consumers believed that besides covering third party liability, it also gave protection against damage to own vehicle and theft.
5 out of 10 motor insurance consumers believed that ZERO DEP cover included repair without deduction, damage to third-party and also covered losses attributed to theft of the vehicle. Whereas 4 out of 10 consumers perceived zero dep cover to be a tool that could mitigate financial loss in case of vehicle repair.
The insurance awareness trend w.r.t motor insurance indicates that consumers may not be totally aware of the nuances of motor insurance. Particularly in the case of the benefits offered from zero depreciation and third party liability cover.