Insurance companies have played a key role in stabilising the capital markets
Millions of people today have entrusted their savings to the life insurance industry and use it to fulfill their long-term financial goals. Life insurance is a preferred choice not only for long-term savings, but more importantly, to ensure financial security of the family in the unfortunate event of the demise of the breadwinner. While insurance can address multiple financial goals of an individual, its unique value proposition lies in the ‘protection’ element that it provides to an individual. An individual should first and foremost address his need for protection and make provision for the financial stability of his family before proceeding to plan for savings and wealth creation.
Today, an individual has a bouquet of products to choose from to address his varied financial needs. Within this portfolio, Ulips as a product category has found tremendous popularity and acceptance among consumers due to its dual benefits of protection and long-term wealth creation. Added to this is the flexibility it offers customers to structure it as per their financial goals and appetite for risk. With the introduction of the new regulatory guidelines from September 1, 2010, Ulips now offer a better and improved value proposition to consumers. This will reinforce the trust of customers in life insurance.
The life insurance sector in India contributes significantly to economic development and nation-building by providing long-term funds. For the economic development of a nation, investments in core areas are necessary. The life insurance industry is a major instrument for the mobilisation of savings of people, reaching out to middle- and lower-income groups and channelising these funds towards the capital markets and infrastructure development. This industry has emerged as the largest and most relevant domestic institutional segment contributing to the stability of the capital markets owing to their sizable long-term equity flows. Given that India has a vast population that has been untouched by the benefits of banking and insurance, the life insurance industry has to increasingly play a prominent role in building a solid platform to enable further growth and infrastructure development.
India has exhibited a robust growth rate in the recent past and is surging ahead on the path of fiscal and economic reforms. The country has witnessed a shift towards an increasing working population with rising income levels, a higher disposable income and purchasing power, as well as an enhanced propensity to save. Consumption patterns have changed and consumers aspire to move up the value chain in terms of goods and services consumed. The robust economy has also spurred higher entrepreneurial abilities and opportunities. In this context, it is paramount for everybody to create a financial safety net to secure and protect their family as they strive for growth and development. Insurance is the only instrument that will be able to create this safety net for people to fall back on in times of exigencies. In a constantly changing world, only life insurance can provide that much-needed sense of security of financial welfare of the individual and his family.