Nearly 50 percent of Indians do not buy term life insurance, and of these, 87 percent underestimate the financial support their family would need if they were to pass away, says a report by Policybazaar.
Titled 'How India Buys Insurance 2.0,' the report adds that 24 percent of the population lacks medical cover. Of these, around 26 percent said they would rather borrow money in case of a medical emergency, while 24 percent said they would sell assets to meet costs.
A major driver behind the recent growth in term plans, where penetration increased from 15 to 29 percent over the last few years, has been real-life stories of claims, which helped consumers understand the impact term insurance can have during a crisis.
But cost remains a major concern, the report said, especially for the younger demographic and for those with inconsistent incomes.
Health insurance is becoming a higher priority among Indians, especially after personal experiences with rising medical costs. In fact, medical bills have now become the second-largest household expense, next only to food, the report pointed out.
People are underestimating treatment costs by more than 50 percent, the report explained, as healthcare inflation, currently at 14 percent, continues to rise.
According to the report, “dedicated claims assistance” is one of the top features buyers look for in a health policy, even above brand recognition.
The report further pointed out a difference in behaviour between geographical locations.
Consumers in south India place the highest value on trust and support services, whereas for those in the north high coverage is a priority.
Across India, word-of-mouth and digital channels are the most trusted sources of insurance information. Indeed, digital platforms are increasingly becoming the first point of information for insurance buyers, overtaking agents and in-person consultations.
However, whether for term or health insurance, one of the recurring themes is the difficulty consumers face in understanding products.
Jargon-filled policies and lack of clear communication from insurers have made insurance a product that people either delay or avoid altogether, the report added.
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