Vibha Padalkar, MD & CEO of HDFC Life Insurance, believes that recent tax changes will not deter Indians from saving, as they understand the importance of relying on their own savings for the future. Despite the changes, HDFC Life has recorded a 24% growth in the first nine months, with customers seeking safe and secure long-term insurance products. Padalkar notes that tax saving is no longer a primary motive for buying life insurance, with customers prioritizing broader financial goals and seeking security in volatile markets.
Padalkar emphasizes that Indians, unlike those in the West, do not have a government-backed social security safety net, and therefore, they must rely on their own savings. She also challenges the stereotype that millennials are irresponsible with money, citing research that shows they become more mindful of financial planning as they approach their 30s.
Regarding HDFC Life’s pension product, SAGA, Padalkar highlights its uniqueness in providing both accumulation and guaranteed annuity rate lock-in at inception. This allows customers to lock in annuity rates today, while income commences in the future, providing a secure and guaranteed lifelong income. She notes that the NPS is a cost-effective retirement accumulation tool, but SAGA offers a more comprehensive solution for post-retirement needs.
On market volatility, Padalkar believes that it will push people towards insurance products, as there is an inverse correlation between equity markets and traditional insurance products. She advises diversification, rather than putting all eggs in one basket, and notes that traditional insurance products can provide a safe haven for a portion of one’s savings.
Padalkar also addresses the issue of mis-selling, stating that HDFC Life takes extra precautions with vulnerable segments, such as low-income individuals and senior citizens. The company conducts 100% verification calls, simplifies policy details, and communicates in local languages to ensure that customers understand the policy terms and conditions.
Finally, Padalkar advises against opting for policies with no medical tests, as this approach can lead to claim rejections later on. She emphasizes the importance of thorough underwriting at the entry stage, citing HDFC Life’s high claim settlement ratio of 99.5% for 2023-24. Overall, Padalkar is optimistic about the life insurance industry’s growth prospects, driven by increasing awareness of the importance of savings and insurance in India.