As compared to the western countries, insurance is still a growing industry in India. The foremost reason might because it is not mandated by the law. The number of people buying a life insurance cover has increased significantly, but still, a large number have no insurance protection till today. In India, many people avoid buying a life insurance policy mainly because either they don’t understand the importance of insurance or consider it as an unnecessary expense.
Common reasons why people in India don’t buy life insurance
1. Lack of understanding:
Basis on needs of customers, the insurance companies in India offer different types of insurance products to suit everybody's needs. Availability of different options often confuses the customer and makes it difficult for them to choose the right plan to suit their needs. So, based on your personal choice and needs, you can choose the right life insurance policy that can help your family well in your absence.
2. Neglect or Procrastinate:
In India, having life insurance is not mandated by law. Also, there is no law that mention specific age to buy an insurance cover. As long as people are healthy enough and not suffering from any disease, they don’t consider protection a priority and tend to believe they don’t need to have any life insurance. But research suggests that four out of ten households where the family is dependent on a single earning member in India, might face difficulties to meet the household expenses in case the breadwinner is no more. After buying a life insurance now, you can support your family in case any unexpected or untimely demise as well.
3. Misconception over expenses:
A common reason why people in India avoid buying life insurance is that they believe it is expensive and consider is as an added expense. But the truth is, it is affordable, and can be easily purchased according to one’s need.
4. Unaware of the financial risks:
Indians are most likely to deny taking life insurance saying ‘nothing will happen to me’. Also, a vast portion of the population in India have minimal or zero knowledge about the financial risks of not having sufficient insurance coverage during the hour of unforeseen crisis.
5. Good Health:
A lot of people in India procrastinate to buy life insurance because they believe that they are young, healthy and don’t need insurance. But it is important to burst the myth, and you must know the best time to buy life insurance is while you are youthful and in good shape. Buying life insurance at young age can get you insured at a lower premium rate. Buying life insurance at old-age can cost you more and you end up paying a higher premium. The reason behind the same can be as you grow in age, chances of getting sick are more.
6. Lack of trust in Insurance Companies:
Since life insurance is sold as an investment product to many uninformed people in India, many people are just wary of anything to do with life insurance. As a result, they refuse to indulge in any conversation related to life insurance.
7. I have a lot of assets, why would I need a Life insurance?
Many of us think it is okay to simply leave behind assets like businesses, and expect the family members to liquidate them to make ends meet (in case of loss of a steady income). What they fail to factor in is the time this process takes and the difficulties their family members will face while waiting for the liquidation to go through.
The study found that millennials in the age group of 25-35 years like to spend on travel and luxury but very few think about protecting their families against financial hardships in case of early death. Only 44% of them were aware of term insurance and just 17% had bought it. An alarming 22% of urban Indian youth do not even consider buying a life insurance policy because they have other investments*.
The primary use of a life insurance policy is to leave family members with a backup plan in case of any eventuality. With a life insurance policy in place, you can say good-bye to these troubles and ensure a secure future for your family. It is time to stop making excuses and buy life insurance for your family’s safety.
*As per the content sourced in Economics Times