Life Insurance Gains Momentum In Urban India, Report Highlights Shift In Awareness – News18

In a notable development for financial preparedness, a recent report revealed that three-quarters of urban Indians have embraced life insurance products, showcasing significant progress in urban India’s financial landscape.

Max Life Insurance released India Protection Quotient (IPQ) 6.0 on Tuesday, tapping 4,700 respondents across 25 Indian cities, which also pointed out that life insurance sales through digital mode have increased compared to the last survey.

The Protection Index is at an all-time high of 45 in IPQ 6.0, up from 43 in IPQ 5.0, reflecting a positive trajectory in the nation’s evolving protection awareness and adoption.

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At the same time, life insurance ownership levels increased to 75 compared to 73 (IPQ 5.0).

Over five years, the India Protection Quotient has witnessed an impressive 10-point increase, from 35 in IPQ 1.0 to 45 in IPQ 6.0, that reiterates Urban India’s constant journey towards building financial resilience, the report said.

In line with previous findings, South India retained its position as the most financially protected zone with a Protection Quotient of 49 points, the report said, adding this was followed by West India, showcasing a marked improvement in financial preparedness from 42 points in IPQ 5.0 to 46 points in IPQ 6.0.

North and East zones lagged in financial protection at 41 and 40 points in this edition, respectively.

The following findings reveal insights that highlight urban India’s shift in attitude and approach towards financial preparedness;

Financial Preparedness Of Urban Indians

The highest progress is seen in awareness of life insurance products, with more than a 50% rise in the Knowledge Index since IPQ 1.0; Life insurance ownership soared to 75%.

In a positive move, urban India has made huge strides in awareness about life insurance over the past six years, with the Knowledge Index increasing from 39 in IPQ 1.0 to 61 as per the IPQ 6.0 study.

Life insurance ownership too witnessed a steady improvement from 65% in IPQ 1.0 to 75% in the IPQ 6.0 survey indicating urban India’s steady path towards financial protection from unforeseen challenges.

Metro and Tier II findings reveal a large gap in the Protection Quotient

IPQ 6.0 revealed a large gap in the IPQ scores of Metro and Tier II cities, with Metro cities inching towards the halfway mark at 49, followed by Tier I cities securing 45 points but Tier II trailing at 36 points. This disparity underscores the ongoing challenge of promoting life insurance awareness and accessibility in smaller urban centers, highlighting the need for targeted interventions to address barriers to financial pliability.

Interesting trends in urban India’s financial behaviour and savings patterns

The burden of rising medical expenses has emerged as the top concern among urban Indians, with nearly two-thirds of the population expressing significant apprehensions. Despite a growing focus on attaining a financially stable retired life, saving for retirement takes a back seat as urban Indians prioritise other savings goals like children’s education and marriage.

Outlook Towards Term Insurance

The gap between Awareness and Uptake of Term Insurance widens as per IPQ 6.0

Despite heightened awareness about term plans, from 64% in IPQ 5.0 to 70% in IPQ 6.0, term insurance ownership has seen negligible improvement since the previous edition, standing at 31% in IPQ 6.0, up from 30% in IPQ 5.0.

The widened gap between ownership and awareness of term insurance products reflects shifting savings priorities, as IPQ 6.0 reveals how safeguarding against the untimely death of the breadwinner holds lower importance amongst respondents.

In terms of other life insurance products, IPQ 6.0 highlighted that 4 out of 10 urban Indians now own one or more savings products, whereas preference for ULIPs remains low at 14% ownership levels. It has also been seen that urban Indians assign higher importance to Cover and Riders while buying Term Insurance, while the priority assigned to premiums has diminished.

Not thinking about life insurance, and other investments are the major barriers witnessed in this edition. An interesting point to note is that today 1 out of 4 Indians prefer Health Insurance over Life Insurance, underscoring the value ascribed to health by Indians.

Millenials & Non Millenials

Financial preparedness across generations reveals disparities

The latest data revealed an intriguing shift in financial preparedness across different generations. While millennials are nearing parity with non-millennials in terms of financial readiness with a Protection Quotient of 45 and 46, respectively, Generation Z trails slightly behind with a Protection Quotient of 42 points. IPQ 6.0 highlights a notable gap in life insurance ownership levels, with Generation Z at 69 compared to non-millennials at 79.

Interestingly, Generation Z demonstrates higher scores in Security levels, indicating a strong sense of financial security at 66, surpassing non-millennials at 63. While Generation Z shows promise in financial planning, there is room for improvement, particularly in term insurance uptake.

Salaried Vs Self-employed

Self-employed urban Indians exhibit a 9-point improvement in Knowledge Index in just one year

While salaried individuals have maintained relatively stable IPQ scores, self-employed urban Indians are making strides in financially preparing for an uncertain tomorrow. Reflecting a significant enhancement in financial literacy and awareness, the Knowledge Index of the self-employed segment stands at 64 – 3 points above the nationwide Knowledge Index scores.

This surge in knowledge is paralleled by a tangible increase in ownership levels, with a rise from 73% to 77%, indicating how the cohort is actively addressing gaps in financial protection.

Digitally Savvy Urban Indians

With an IPQ of 54, Urban India’s digitally-savvy consumers are more financially protected than any other cohort

Data revealed that the Protection Quotient of digitally-savvy urban Indians is 9 points higher than their non-digital counterparts, with the score of the cohort at 54, whereas the non-digital cohort stands at 45 points. The Knowledge Index remains highest in the digitally savvy urban Indian cohort at 73, with 80% of respondents owning life insurance.

While traditional channels like agents remain prevalent, there’s a shift towards online channels, reflecting digitally-savvy consumers’ preference for convenience and accessibility. The substantial jump from 11% to 24% in fitness app subscribers within a year underscores the evolving lifestyle choices and preferences of urban Indians.

Max Life MD and CEO Prashant Tripathy said over the past five editions, the IPQ has become a true barometer for measuring urban India’s financial protection levels.