Decoding the Decline in Life Insurance Penetration in India
When was the last time you thought about getting a life insurance policy? If your answer is “I will get to it someday”, you are not alone. Despite India growing as one of the fastest expanding economies, life insurance penetration across the nation has remained surprisingly low. Life insurance penetration fell slightly to 2.8% in FY24, down from 3% in the previous year.
While we happily upgrade our smartphones, invest in the latest gadgets, and book fancy overseas vacations, securing our financial future often takes a backseat. So, what has caused this curious case of life insurance avoidance? Let’s go over the reasons.
Why is Life Insurance Overlooked in India?
Ideally, life insurance coverage is something that everyone should have, but somehow, it slips through the cracks of our everyday life. A few reasons for this are:
- Perception Problem: In India, life insurance still carries the old-school image of being relevant only after a certain age. If you are young, independent and seemingly invincible, it is easy to think you don’t need it.
- Complicated Jargon: Let’s be honest – the world of insurance can sound like we have entered a different universe. Terms like sum assured, life insurance premium, maturity benefit, and add-ons can scare off people who are looking to get insured.
- Myths Regarding Affordability: Many individuals think life insurance premiums are too expensive. In reality, a basic term insurance policy can be surprisingly affordable, especially when you are young.
- Procrastination Culture: “I’ll get it next month when I have money to spare” often turns into “maybe next year,” and before you know it, life gets busy and the decision gets shelved.
Why It Matters More Than Ever?
What makes life insurance such an important part of your financial plan? It is not just about having peace of mind for yourself — it’s about ensuring your loved ones stay financially protected if life throws an unexpected curveball. Whether it is paying off pending loans or managing ongoing household expenses, a good term insurance policy steps in when your family needs support the most.
And it’s no longer just about providing a lump sum in tough times. Many term insurance plans today come packed with extra benefits like premium return options, critical illness coverage, disability protection, and retirement savings features. With healthcare costs climbing and financial markets staying unpredictable, having a solid policy in place has quietly shifted from a “nice-to-have” to a “must-have.”
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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