India Life Update

A majority (64%) of Indians are still risk averse and prefer traditional insurance covers over ULIPs (19%), a study has revealed. In line with the study's findings that only one-fifth of people go for ULIPs over traditional policies - the study also found that Indians are predominantly risk averse and they invest more in bank deposits, gold, real estate and less on equity products.

Interestingly, about 59% of respondents were unclear as to what benefits their families would receive on the death of the policyholder. And as many as 68% of policyholders were unclear as to what benefits they'd receive on maturity of the policy. Another worrying aspect is that 64% policyholders needed the help of the interviewer before they were able to identify whether they held a life or health insurance policy, the survey conducted by FICCI and Canara HSBC Oriental Bank of Commerce Life Insurance Company said.

About 81% of respondents indicated that their operating bank account was within 3 km of their residence indicating that bancassurance has a large role to play in insurance penetration in the country, said the study which has interviewed 5,000 respondents in more than 30 cities. Banassurance is the selling of life insurance and other products by banking institutions.

Of the 5000 respondents, 4488 policyholders said that they had taken up an insurance policy through their bank; indicating that 60% were bancassurance customers. The need for bancassurance gains more ground, when the study found that more than half the respondents interviewed live in close proximity to their bank branch and have maintained a long term relationship with the branch.

As many as 72% respondents interviewed said that they have bought an insurance policy because the bank had approached them, indicating that bancassurance has emerged as an important insurance distribution channel in India. There also seems to a general apathy with regard to the promptness with which people take life insurance covers - with as many as 89% respondents saying that they took up a policy only after they were approached by their agent or bank.

It was found that people generally paid insurance on an annual basis (62%) with the average premium ticket size of Rs 13,000 and payments being made via their agent (38%) or the bank (34%). As to the reasons for taking life insurance, the need to save for one's future (75%) and providing security for the family (64%) were the top reasons for a life cover. Respondents, who didn't have a life insurance cover, said that they viewed insurance as a tax saving measure and as an umbrella against uncertainties.