Why 50% of Indians Are Still Ignoring Term Insurance-and How to Change That
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In a rapidly developing country like India, where aspirations are rising and the middle class is expanding, financial security remains a critical concern. Yet, surprisingly, almost half of Indians have still not invested in term insurance. A recent survey revealed that about 50 percent of India’s population continues to ignore this essential protective measure, despite growing awareness campaigns and easier access to insurance products.
The survey findings indicate a concerning gap between financial planning needs and actions. Despite an increase in the availability of insurance products and a surge in digital platforms simplifying the buying process, term insurance remains overlooked. Many individuals still do not fully comprehend term life insurance and why it should be prioritised over other forms of financial investments.
Understanding what is term insurance
Before delving into the reasons behind the lack of adoption, it is important to understand what is term insurance. Term insurance is a pure life cover plan. It ensures that in the unfortunate event of the policyholder’s death during the policy term, the beneficiary receives a lump sum amount, thereby securing the family's financial future. Unlike traditional life insurance plans, term insurance does not offer any survival or maturity benefits. Its sole purpose is to provide financial protection at a very affordable cost.
This simplicity often leads to misunderstandings. People frequently assume that an insurance product must offer returns to be valuable. However, what is term insurance if not a guarantee of peace of mind and protection? It is precisely the absence of complicated investment components that makes term insurance one of the most straightforward and necessary tools for financial planning.
Why Indians are still avoiding term insurance
Despite the simplicity and the significant protection it offers, many Indians are hesitant to purchase term insurance. Several reasons contribute to this worrying trend:
- Lack of awareness: Many individuals are still not clear about what is term insurance, leading to confusion between investment-linked insurance products and pure protection plans.
- Perception of low value: Since term insurance does not offer any maturity benefit, a considerable portion of the population views it as an unnecessary expense.
- Procrastination: Financial planning is often delayed until later stages of life. Many individuals feel they have enough time and believe that purchasing term insurance can be deferred.
- Financial priorities: In a country where immediate financial needs such as education, marriage, and housing often take precedence, long-term planning through term insurance is frequently sidelined.
- Mistrust of insurance companies: Negative experiences, cumbersome claim settlement processes, and opaque policies have led to a lingering mistrust among potential buyers.
The risks of delaying or ignoring term insurance
The consequences of ignoring or delaying the purchase of term insurance can be severe. Without a proper life cover, families remain vulnerable to financial instability in the event of an unexpected tragedy. Outstanding debts such as home loans, education loans, and personal liabilities could severely burden surviving family members.
Furthermore, delaying the decision to buy term insurance often results in higher premiums later, especially as individuals age or develop health conditions. The sooner one understands what is term insurance and secures adequate coverage, the more affordable and beneficial it becomes.
How to improve term insurance adoption
The survey underscores the need for a significant shift in awareness and perception. To bridge this gap, several measures can be taken:
- Educational campaigns: Financial literacy programmes must focus on explaining clearly what is term insurance and its unique role in providing life protection.
- Simplifying products: Insurers need to offer more transparent and easily understandable term insurance plans without hidden terms and confusing riders.
- Digital empowerment: Online platforms have made it easier to compare, buy, and manage term insurance policies. Encouraging digital adoption can help simplify the customer journey.
- Early financial planning initiatives: Introducing financial planning discussions at an early age, especially during university education or early employment years, could encourage timely investment in term insurance.
- Trust-building efforts: Insurers must focus on building credibility through seamless customer service and swift, transparent claim settlement processes.
Disclaimer: No Business Standard Journalist was involved in creation of this content
Topics : term Insurance plan
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First Published: May 12 2025 | 5:34 PM IST
