A recent survey conducted by Bajaj Allianz Life Insurance, in collaboration with NielsenIQ, has revealed that a significant majority of Indians, approximately 81%, underestimate their life insurance needs. Financial experts generally recommend that individuals should have life cover equivalent to at least 10 times their annual income. However, the survey found that the actual coverage among Indians is only about 3.1 times their income, leaving many financially vulnerable in the event of unforeseen circumstances.
The survey highlighted a significant gap between perception and reality, with Indians believing they have coverage worth 6.4 times their income, when in fact it is only 3.1 times. Furthermore, one in three Indians has never reviewed their life insurance policy, even after major life events such as marriage, childbirth, or an increase in income. This lack of review is more pronounced among self-employed and affluent individuals, with 43% never having assessed their coverage, thereby increasing their risk of underinsurance.
Despite having low coverage levels, 82% of respondents expressed confidence that their life insurance would provide sufficient financial security for their families. The survey also noted a change in buyer trends, with the average age of first-time insurance buyers decreasing from 33 to 28 years. Key factors driving these purchases include family responsibilities, income levels, and health concerns.
The survey revealed an awareness gap, with nearly half of Indians relying on personal research to make life insurance decisions. However, many fail to reassess their coverage after significant life changes. Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, pointed out that India’s total sum assured stands at only 70% of GDP, which is substantially lower than other countries such as the US, Thailand, and Malaysia. This shortfall could lead to families using their savings or selling assets during financial crises, thereby disrupting their long-term financial goals. The survey underscores the need for Indians to reassess their life insurance needs and ensure they have adequate coverage to mitigate financial risks.