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.