For every USD 100 needed for protection, only USD 7.8 of saving and insurance is in place for a typical Indian household, leaving a massive mortality protection gap of USD 92.2, says a study by Swiss Re.
In India, the size of the mortality protection gap is significant at USD 8,555 billion in 2014, having grown by 11 per cent per annum between 2004 and 2014, reinsurance major Swiss Re said.
Mortality protection gap represents the difference between the cover typically required by a family and the resources they have available should a wage-earner pass away suddenly.
The study says insurance has grown strongly in India but from a very low base and in 2014, India had life insurance penetration rate of 2.6 per cent of gross domestic product.
It further showed that the sum insured per working person with dependents in India was still low at USD 2,101 in 2014 (about Rs 1.3 lakh).
India ranked ninth with respect to per capita sum insured in 2014, among 13 Asia-Pacific markets examined, the study said.
It further noted that the increase of foreign investment limit in Indian insurers to 49 per cent from 26 per cent in 2015 presents more opportunities for insurers to help close this gap.
The Swiss Re Group is a leading provider of reinsurance, insurance and other insurance-based forms of risk transfer.
