With increasing cost of healthcare insurance has now become a necessity; however, numerous households in India do not have any insurance cover. Insurance penetration of health and life covers.
According to India’s largest insurer Life Insurance Corporation (LIC), insurance penetration in India has failed from 4.4% in 2010 to 3.2% in 2020. The non-life insurance penetration was a paltry 1% in 2020 which shows products such as health insurance are still far from popular. Notably, in 2019, the overall insurance penetration was even lower at 2.82% and experts attribute Covid-19 for the increase in overall insurance penetration.
Insurance penetration is measured as the percentage of the life insurance premium paid in a year to overall GDP. Insurance density is the ratio of premium to population.
There are plenty of reasons why insurance products are not popular in India despite their immense importance in the financial and medical well-being of a family.
As Covid showed, a life insurance cover is crucial to provide financial stability in case the breadwinner of the family passes away. Life insurance or term insurance is the simplest but most important insurance product available in the market. It is also the cheapest among all insurance products. While it is natural to anticipate long and healthy life, it is crucial to think about the financial needs of the family in the eventuality of death.
Due to innovation in the financial industry, insurance has been made complex with the introduction of new products which combine insurance and investment. Experts say a pure term insurance plan is the only that offers the best and simplest form of protection – death benefit— to surviving family members of the policyholder. However, a comprehensive life insurance policy which offers life cover along with maturity benefits.
Most people are under the impression that the insurance cover provided by the employer is enough. This isn’t always true as group policy offers bare minimum protection and may not be sufficient for the needs of your family.