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21 Sep 2020, Edition - 1896, Monday

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India News

Why Demand for Life Insurance Policy Is Rising in India?

Covai Post Network

TCP : ADVERTORIAL

In India, the demand for term life insurance is rising due to the increased awareness amidst the COVID-19 pandemic. Nowadays, as the masses are experiencing uncertainty over cash-flows and shifting focus to goal-based financial planning, buying a term insurance policy is becoming a priority for many individuals and families.

Adapting to the new normal during the coronavirus pandemic, more and more people are utilising the availability of term insurance policies online to review, compare, and purchase term plan coverage. On the other hand, reputable life insurance companies are working towards developing a 360-degree digital advisory and customer fulfilment process to empower sales with the required tools, skills, and demography. Let us look at the various factors that are contributing to the growing demand for buying a term insurance policy, including the term plan tax benefits .

Penetration of Life Insurance in India

In recent years, the government’s efforts of extending the insurance protection to the lower sections of the society through the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) has provided fresh impetus to the penetration of term life insurance in the country.

In the FY20, the life insurance companies in India reported a total of Rs 7.31 trillion (or USD 94.7 billion) in terms of gross premium collected. In contrast, the overall insurance penetration (expressed as premiums as a percent of GDP) in the country reached 3.69% in the year 2017.

Demographic factors such as the young insurable population, growing middle class, and increasing awareness among the masses of the need for financial protection and retirement planning are some of the factors that are supporting the growth of term life insurance in India.

Factors that Contribute to the Increasing Demand of Term Life Insurance

As per the India Protection Quotient Express: COVID – 19 Edition survey, jointly conducted by Max Life Insurance and KANTAR, the following are the key areas/concerns of the urban population in the
country –

 Need for job security and income stability

 Financial security for the family members in case of the untimely death of the breadwinner

 Increasing instances of illnesses and associated day to day medical expenses

 Inadequacy of finances in case of critical illness

 Sustaining lifestyle and expenses with current earning

These reasons and several others contribute towards the increase in the number of new term life insurance policy buyers in India. Also, in a bid to increase awareness of purchasing term life insurance, insurers in India are shifting focus on improving customer journeys and customer experiences. Instead of lengthy paper-based offline insurance sales, customers are now demanding a seamless and transparent term life insurance buying experience – complete with quick information and feedback.

Technology has become a Key Enabler 

In India, the growing number of internet users in India, in turn, has inspired life insurance companies to shift focus on digitisation of their businesses, and leverage technology to offer innovative and relevant, yet cost-effective term life insurance products to their customers.

As a result, insurers have now enhanced their products into need-based personalised offerings. Another reason why customers are now investing in the best insurance term insurance policy for themselves is that insurers have started leveraging data analytics to develop better risk insights and optimise underwriting and pricing.

Evolving Business Models 

Traditionally, insurance companies have adopted a product-centric approach, which was driven by advisors and marketing insights. In the current landscape and with COVID-19 wreaking havoc, however, more insurers are shifting focus on improving customer experience and leveraging digital channels and technology to reach out to new demographics.

Emerging technology, such as chat bots, has already replaced agents and support executives as the first point of contact for customers. Also, the availability of online term insurance premium calculators and insurance aggregators has enabled customers to make calculated and informed decisions by reviewing, comparing, and buying term insurance policies online.

Multi-Product Offerings 

Another trend that is contributing towards the growing demand for term insurance policies is that life insurance companies are now offering a complete gamut of products, as a natural extension to their core portfolios, such as financial planning, and health insurance benefits. Through these multiple product offerings, insurance companies strive to become more visible and inspire loyalty among their customers.

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