Young Indian Rushed To Buy Life Insurance

Most Indian averaging twenty-somethings, kept postponing buying a life insurance policy, until a surge in COVID-19 cases and deaths made them confront her own mortality. The official count puts the number of deaths due to COVID-19 at 380,000, the third highest after the United States and Brazil (though many experts say India's numbers are grossly underestimated due to the low levels of testing for the virus and more people have probably died in India than anywhere else in the world).

When a devastating second wave of the pandemic peaked in India during April and May, the numbers of people aged between 25 and 35 buying term insurance was 30% higher than in the previous three months combined (reported by India's largest online insurance aggregator).

Term insurance - purchases via a popular online insurance aggregator website rose 70% in May compared with March. Insurers did not reveal how many plans they sold citing business confidentiality, but many said it was in the "high thousands".

Demand for protection products by the under-35 age group since the pandemic first struck India, around 15 months ago. Industry executives say enquiries about insurance plans have rocketed despite the second wave of infections subsiding, probably due to strong prospects of a third wave given the slow start India made to the mammoth task of vaccinating its people. 

Behavior Change - Despite the lack of firm numbers on growth in the life insurance market, industry analysts see behavior changing among middle class families in a country that has traditionally seen poor levels of coverage. After clothes, food and home, insurance has now become the fourth pillar for a middle class family. 

Life insurance penetration - among India's population stood at 2.82% in 2019, compared with 2.15% in 2001, the latest annual report from the Insurance Regulatory and Development Authority showed. That is still well down from a global average of 3.35% in 2019, but then a large section of India's 1.35 billion people lack disposable income to set aside for insurance, a situation made even more acute by the economic fallout from the pandemic. 

Term insurance plans are popular in India because they are often cheaper and pay the family if the insured dies within the policy's payment period, though there is no maturity benefit if they outlive the plan. Demand for other kinds of insurance, including various medical cover, has also risen.