Survey Finds 81% of Indians Underinsured with Only 3.1x Income Coverage

A recent survey conducted by Bajaj Allianz Life Insurance in collaboration with NielsenIQ has revealed a concerning trend—81% of Indians are underinsured. While financial experts recommend life cover of at least 10 times an individual’s annual income, the actual coverage among Indians is just 3.1 times their income. This significant gap in coverage leaves many families financially vulnerable in case of unforeseen events.

Perception vs Reality: The Underinsurance Dilemma

One of the key findings of the survey highlights the stark difference between perception and reality when it comes to life insurance coverage. Indians believe they have coverage worth 6.4 times their income, but in reality, it is only 3.1 times. This misjudgment can create a false sense of financial security, leaving families unprepared for financial setbacks.

Lack of Regular Policy Reviews

Another alarming insight is that one in three Indians has never reviewed their life insurance policy, even after significant life events such as marriage, childbirth, or income increase. Among self-employed and affluent individuals, this number rises to 43%, increasing their risk of being underinsured. Regular policy reviews are essential to ensure adequate financial protection, yet many individuals neglect this crucial step.

Confidence Despite Inadequate Coverage

Surprisingly, despite low coverage levels, 82% of respondents expressed confidence that their life insurance policy would provide sufficient financial security for their families. This misplaced confidence could lead to financial distress in times of crisis, as families may struggle to cover expenses such as outstanding loans, education costs, or medical emergencies.

Changing Buyer Trends

The survey also highlights a shift in insurance-buying behaviour. The average age of first-time insurance buyers has decreased from 33 to 28 years. This shift indicates that younger individuals are becoming more financially aware and are considering life insurance earlier in their careers. Key factors influencing these decisions include family responsibilities, income stability, and health concerns.

India’s Low Insurance Penetration Compared to Global Standards

The survey also sheds light on India’s total sum assured, which stands at only 70% of GDP. This figure is significantly lower than countries such as the US (251%), Thailand (143%), and Malaysia (153%). The lower penetration of life insurance in India suggests that many households may face financial hardships during emergencies, forcing them to dip into savings or liquidate assets.

Conclusion

The findings of the Bajaj Allianz Life Insurance survey highlight an urgent need for Indians to reassess their life insurance coverage. With only 3.1 times their income covered, a vast majority remain underinsured, putting their families at financial risk.

To ensure financial security, individuals should regularly review their policies, seek professional guidance, and opt for coverage that truly meets their needs. Increasing life insurance awareness and penetration is essential for building a financially secure future for Indian families. The right coverage today can prevent financial hardships tomorrow.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.