The lack of adequate insurance is a reality in many Indian families. Besides, misconceptions surrounding insurance and its effectiveness have refrained many people from considering any one of them.
This “Life Insurance Awareness Month”, SBI Life Insurance has redirected its investors’ focus on life insurance by unveiling the third edition of its comprehensive consumer study “Financial Immunity Study (F.I.) 3.0” titled “Demystifying the Consumer’s Illusions”.
This study explores the thought processes of Indian consumers, dispelling misconceptions about financial readiness and uncovering prevalent illusions that obstruct their journey toward genuine financial security. The study findings were obtained through a survey of 5,000 respondents in 41 cities, spanning the entirety of India.
Amidst a world reshaped by unforeseen challenges, the study mirrors a stark reality that the Indian consumer's perception of financial preparedness is often clouded by illusions that could have dire consequences leading them or their family members to have inadequate financial protection amidst life uncertainty. While 68 percent of consumers believe that they are adequately insured, only a meagre six percent of insured consumers in fact have sufficient insurance coverage.
However, there is still a reason for hope, as a promising 71 percent of uninsured respondents believe that insurance is absolute necessity to achieve ‘financial immunity’. Additionally, an overwhelming 83 percent of individuals who are insured recognise the critical nature of insurance in achieving financial resilience, reveals SBI Life’s Financial Immunity Study 3.0.
Speaking on the launch of Financial Immunity Study 3.0, Mahesh Kumar Sharma, MD & CEO, SBI Life Insurance, said, “At SBI Life Insurance, our vision has always been to liberate individuals to pursue their dreams, by securing the needs and aspirations of their loved ones. With our latest initiative the 'Financial Immunity Study 3.0,' conducted in collaboration with Deloitte, we continue to take meaningful strides towards achieving this purpose of liberating individuals by demystifying the illusions that cloud the true understanding of financial preparedness of Indian consumers. Our aim is to empower individuals with knowledge, tools, and solutions that will fortify their financial foundations and ensure their peace of mind in an uncertain world.”
He further added, “The findings underscore a critical need for a paradigm shift in how we perceive financial preparedness. It's a matter of great concern that 80 per cent of consumers acknowledge insurance's pivotal role in financial security, yet a staggering 94 per cent remain inadequately covered. This stark contrast between perception and reality drives our mission's urgency. The study is more than just a report; it's a call to action. We believe that every individual deserves the opportunity to build resilience against life's uncertainties. Together, we can bridge the gap between perception and reality, and truly empower individuals to achieve ‘Financial Immunity’.”
Further, the highlight of the report is the revelation of five pervasive consumer illusions that have marred true financial preparedness; overcoming these misconceptions can illuminate the path to a financially immune future:
Illusion 1: “Merely owning an insurance policy guarantees adequate protection”
68 percent of consumers are living in an illusion of having sufficient insurance coverage but the fact is that only six percent are sufficiently insured under their current insurance policies. In reality, 94 percent of consumers are either underinsured or uninsured.
Illusion 2: “Investments in financial instruments provide better security than insurance”
In reality, 80 percent of consumers believe insurance is an absolute necessity for financial immunity & 71 percent of uninsured consumers feel insurance is a critical lever in building financial immunity.
Illusion 3: “Insurance policies can be forfeited in the event of fund shortage”
About 50 percent of consumers revealed a tendency to prematurely surrender their policies. But in reality, insurance policies can act as collateral for loans in times of need.
Illusion 4: “Owning assets and savings is a replacement for Life Insurance”
In reality, 62 percent of consumers are not confident in their savings for the future. Traditional investments like fixed deposits and savings are favoured by Indian households, but they offer different advantages compared to insurance policies.
Illusion 5: “Employer-provided insurance cover is sufficient”
96 percent of employees covered solely under their employer-provided insurance are underinsured. In reality, employer-provided insurance policies may not always be sufficient, depending on individuals' growing needs.