Term insurance ownership has risen to 43% from 36% in two years: IPQ Survey

This indicates consumers are now diversifying their insurance holdings and building a holistic portfolio by investing more in life insurance, including term, market-linked and savings plans

Indians are buying more term plans now as term insurance ownership has gone up to 43 per cent from 39 per cent last year, revealed the India Protection Quotient (IPQ) survey 4.

This is despite life insurance ownership remaining unchanged at 78, signifying the fact that consumers are now diversifying their insurance holdings and building a holistic portfolio. The term insurance ownership has gone up from 36 per cent to 43 per cent in two years’ time.

The increase in term insurance ownership is despite life insurers having increased term insurance premiums significantly in the past two years, on the prodding of reinsurers because of worsening mortality experience.

“There is a bit of term price increase that is going on, with most players revising their prices. We will be increasing our prices in a few weeks. It is dependent on the mortality experience. Hopefully, we are coming to a stage where the prices will stabilise. Also, the force of competition will counterbalance the price increases”, said Prashant Tripathy, Managing Director and CEO, Max Life Insurance.

The IPQ4 survey also reveals that while premium still remains the main parameter behind the decision of buying term products, the amount of cover or sum assured as a parameter has also picked up in recent times , signifying consumers are increasingly looking at the adequacy of their covers. This can be indicated from the fact that almost 57 per cent respondents in the survey feel that their term coverage is insufficient. This number stood at 40 per cent in the last IPQ survey.
 

“South demonstrated the highest term insurance ownership at 45 per cent. Ownership increase was also witnessed in metros and Tier 1 cities at 48 per cent and 44 per cent respectively, however only 35 per cent term ownership was seen in Tier 2 cities which require more efforts to build term adoption”, the IPQ survey said.

“While India has realised the real value of term insurance, existing barriers are limiting efforts to drive increased awareness and adoption till the last mile,” said Tripathy.

Overall, the IPQ survey revealed that the ‘Protection Quotient’ of urban India has moved up 3 points to 50, owing to increasing immunization coverage and a growing positive outlook beyond Covid-19. Also, urban India’s knowledge index increased to 69, and the security index increased to 56.

Among other things, the survey has also highlighted that the pandemic related anxieties such as death of breadwinner has receded while personal well – being related anxieties has increased with the pandemic straining mental and physical health.

Further, urban India has gone back to prioritising savings for children’s education and retirement planning, moving the focus away from medical emergencies, which was seen during the previous surveys that was done during the pandemic at its full might.