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Indians most worried about job loss, debt, economic slowdown after COVID-19 second wave: Study

HDFC Life’s Life Freedom Index--a marker of Indians’ financial preparedness--fell 4.8 points in 2021, highlighting the adverse impact of COVID-19

August 20, 2021 / 02:21 PM IST
Representative image (Source: ShutterStock)

Representative image (Source: ShutterStock)

Close to 90 percent of Indian consumers have faced salary cuts or business losses to some extent and therefore continue to be concerned about COVID-19, a study conducted by HDFC Life has found. The top three concerns for Indians--economic slowdown (67 percent), job insecurity (51 percent) and fear of debt (41 percent) due to lack of income--are also linked to the pandemic.

The Life Freedom Index, an indicator of financial awareness, preparedness and security, slipped 4.8 points to 61.8 in 2021 from 66.6 in 2019, highlighting the adverse impact of COVID-19.  “The drop indicates that the health pandemic has turned into a financial concern with various challenges surfacing,” says Vishal Subharwal, Head – Marketing, Digital Business & E-commerce, HDFC Life.

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Likewise, the Financial Sufficiency and Adequacy Index dipped by 8.7 points to 62.8 indicating that consumers feel their current financial plans might not be adequate. Expectedly, the health expenses score jumped by 13 points compared to 2019, the study noted.

A measure of financial preparedness

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

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There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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The purpose of the HDFC Life’s Life Freedom study is to ascertain the state of financial freedom of urban Indian consumers. It ascertains their awareness about available products, sufficiency and adequacy of financial planning, and their current state of financial freedom.

It includes four sub-indices Financial Awareness Index, Financial Planning Index, Financial Sufficiency and Adequacy Index, and Financial Liberty Index. The four indices together enable the measurement of the ‘financial freedom’ of consumers. In 2021, the study covered 1,987 respondents across various life-stages and 14 cities including metros, tier-I and tier-II cities.

Financial awareness on the rise

On the bright side, financial awareness around financial products increased over the last year. The index rose 2.1 points to 53.4 from 2019. “Maintaining one’s standard of living under unexpected adverse events has been an important factor driving the need for financial security,” per the study.

Familiarity with term insurance – pure protection risk cover - has increased by 11 points, while it has gone up by 10 points for both endowment and unit-linked plans policies. Not surprisingly, the pandemic has led to Indians giving more importance to life insurance. Over 41 percent of those polled said they bought a life insurance policy in the first wave that enabled them to plan better for the second wave, according to the report.

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Parents, well-heeled women more concerned about financial preparedness

The study categorises consumers into ‘proud parents’, ‘wisdom investors’, ‘smart women’ and ‘young aspirants’ brackets. The first two categories comprised 39 percent and 29 percent, respectively. Smart women (working women aged 25-45 who have invested in at least one financial product) and young aspirants (20-30-year-old males who have invested in at least one financial product) made up 10 percent and 22 percent of the respondents, respectively.

The impact of COVID-19 on financial preparedness was more prominent among parents, specifically 31-45-year-old males with kids, followed by the segment of ‘smart women’.

“This is largely driven by the feeling of insufficiency,” the report noted. Wisdom investors (45-60-year-old males who have invested in at least two financial products) and young aspirants have felt the minimal impact. The former happens to be in a comfortable position due to maturity in handling finances and investments and the latter due to the fact that they have fewer financial responsibilities and no dependents.
first published: Aug 19, 2021 11:57 am

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