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Reasons why Indians avoid buying Life Insurance
Many Indians avoid life insurance due to misconceptions and lack of awareness. They underestimate the risk, believing they are invincible or that life insurance is unnecessary. The variety of plans confuses them, leading to inaction. Many rely solely on inadequate company-provided cover, while healthy individuals assume they won’t need it. Procrastination is another major reason, with people delaying purchases until premiums become costly. Education about financial planning and the benefits of early life insurance can help families secure their financial future.
1 Crore Term Insurance@Rs.21/day***
To delay is to regret
You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
:1800-266-9777
5 Reasons Why People Avoid Buying Life Insurance in India
In India, a majority of the population does not have any kind of insurance or life cover. Very often, life insurance in India is misunderstood. People do not realise how crucial life cover is to them or their family. To understand why people don’t buy life insurance, we need to understand their behaviour. In India, hardly any people spend time explaining financial tools or how to use them to their children. Elders expect the next generation to sort things out themselves. Unfortunately, this could leave people open to great financial risks. Let’s take a look at the top five reasons why people avoid buying life insurance in India.
Why People Don’t Buy Life Insurancein India?
They Don’t Understand the Risk
A life insurance policy provides financial stability to the family when the insured individual passes away. While we all know that death is an eventuality, people choose not to think about it. They believe that they have some sort of divine protection. They assume that life insurance would be a waste of money.
The Products Confuse Them
Many different plans offer life insurance in India. You can opt for a simple term plan that just provides life cover. Or, if you want something more wholesome, you can pick a comprehensive life insurance policy. These plans provide the same life cover as term plans but also provide some maturity benefits. There are also several Unit-Linked Insurance Plans (ULIPs) available today. These policies offer both investment opportunities and life insurance cover. Despite their many benefits, ULIPs are often viewed negatively. Since there are many options available, people get confused about which product is right for them. When they’re unable to understand or make a decision, they move on to other financial tools.
Company Cover
Most people refuse to purchase individual insurance policies since they enjoy cover from their employer. They believe that the cover offered by the group policy is more than enough to sustain their family. Unfortunately, this is not always the case. Very often, the cover provided by group plans is quite minimal. On top of that, people don’t realise that if they leave the company, they will no longer enjoy life cover. By the time people realise they should get their own plan, the premiums become costly, which dissuades them again.
Happy and Healthy
One of the main reasons why people don’t buy life insurance is because they are healthy. In their opinion, they will not require life cover as they are not likely to fall ill or succumb to an illness any time soon. What they don’t realise is that they are one fatal accident away from leaving their family without any kind of financial safety net. More importantly, healthy individuals do not realise how affordable it is for them to purchase life insurance in India. Younger individuals who do not pose any risk can get higher cover at extremely affordable premiums.
Procrastination
While it may seem like a silly reason, many people just put off buying insurance to a later date. They fall into a cycle of putting it off until they wake up one day and find that it’s too expensive. In India, the problem is compounded by the fact that there’s no law making life cover mandatory. Additionally, very few people talk about the right age to purchase a life insurance policy. Most insurance providers will offer younger individuals better deals since they’re least likely to make claims in the near future. As people get older, their risk potential increases, so insurance providers charge higher premiums for the same life cover amount.
Many misconceptions surround the purchase of life insurance in India. Too many people falsely believe that the cost does not outweigh the potential risk. But, they do not realise that the cost of these policies depends on their health and age. Younger people must take the initiative to purchase life cover for themselves and their loved ones. It may seem morbid to think about death, but it’s a great way to financially protect your family. It’s also crucial for parents to start teaching their children about managing their finances. By talking about the various insurance policies available, parents can help their children understand the importance of each type of plan. Armed with the right information, their children will grow up and make prudent decisions regarding their financial plans and life insurance policies.
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
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HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
^ Available under Life & Life Plus plan options
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved
##Individual claim settlement ratio by number of policies as per audited annual statistics for FY 23-24
***Online Premium for Life Option for HDFC Life Click 2 Protect Super (UIN: 101N145V07), Male Life Assured, Non-Smoker, 20 years of age, Policy term of 25 years, Regular pay, Annual frequency, exclusive of taxes and levies as applicable. (Monthly Premium of 622/30=20.7).
**7% online discount available on 1st year premium only
@As per integrated annual report FY23-24, available on www.hdfclife.com. As of May 2024
~Tax benefits of ₹ 54,600 (₹ 46,800 u/s 80C & ₹ 7,800 u/s 80D) is calculated at highest tax slab rate of 30% on life insurance premium u/s 80C of ₹ 1,50,000 and health premium (Critical illness rider) u/s 80D of ₹ 25,000. Tax benefits are subject to conditions under section 80C, 80D, 10(10D) as per Income Tax Act, 1961. Please consult your tax advisor for more information.
