The increasing number of affluent individuals in India and their evolving insurance needs

As India’s affluent population continues to grow, their insurance needs will become increasingly complex.

India is witnessing a remarkable rise in the number of affluent individuals, a reflection of the country's robust economic growth, increased entrepreneurial activity, and the global expansion of its businesses.

The affluent population—typically comprising high-net-worth individuals (HNWIs), ultra-high-net-worth individuals (UHNWIs), and the emerging affluent—has grown significantly over the past decade. With this rise comes a corresponding evolution in their financial priorities, particularly in the realm of insurance.

The rise of affluence in India
According to an EY report, India has emerged as one of the fastest-growing markets for wealth creation. The number of millionaires and billionaires continues to rise, fuelled by booming industries such as technology, real estate, pharmaceuticals, and e-commerce. Additionally, professionals in sectors like IT, consulting, and finance are contributing to the growth of the emerging affluent class, characterised by increasing disposable incomes and aspirations.

Evolving insurance needs of affluent individuals
The affluent demographic has unique insurance requirements that differ significantly from those of the general population. Their needs are influenced by factors such as wealth preservation, legacy planning, and risk mitigation for high-value assets. Below are some key aspects of their evolving insurance needs:

Life insurance for long-term financial security
Life insurance remains a cornerstone for affluent individuals to ensure their families' financial security and meet long-term goals. Key considerations include:

• Estate planning: Life insurance policies can be structured to  ensure smooth wealth transfer across generations.
• Income replacement: Policies like term insurance provide financial protection for dependents in case of unforeseen events.
• Investment-linked plans: Unit-linked insurance plans (ULIPs) and endowment plans cater to wealth accumulation whilst offering insurance coverage to cover any unforeseen eventuality.
• Whole life insurance: These policies ensure lifetime coverage and can be used as a financial tool for legacy planning.

Comprehensive coverage for high-value assets
Affluent individuals often own high-value assets, including luxury homes, expensive vehicles, art collections, and jewellery. They seek insurance policies that provide extensive coverage, including protection against theft, natural disasters, and depreciation. Tailored products such as fine art insurance and collector vehicle coverage are increasingly in demand.

Health and wellness focus
With a growing emphasis on health and wellness, affluent individuals prioritise access to top-tier medical care worldwide. They seek comprehensive health insurance policies that include global coverage, access to specialist treatments, wellness benefits, and concierge services. Policies offering critical illness coverage and income replacement during prolonged medical conditions are also gaining traction.

Wealth preservation and legacy planning
Insurance plays a crucial role in wealth preservation and legacy planning. HNWIs and UHNWIs often use life insurance products to secure their families’ financial future  and facilitate intergenerational wealth transfer. Products like ULIPs and whole life insurance are popular choices for this segment. In order to ensure a seamless transfer of wealth the concept of Married Woman Property Act is being leveraged by UHNW and HNW individuals to create a Ring fenced encumbrance free estate. This has the ability to work as an estate equalisation and business risk mitigation tool and hence is a popular choice whilst purchasing large value life insurance policies.

Liability and risk management
Affluent individuals face higher exposure to liability risks, whether through business dealings, property ownership, or high-profile lifestyles. Policies that address personal liability, directors and officers liability, and cyber risk insurance are increasingly sought after to protect their wealth and reputation. This segment is seeing a lot of innovation where the propositions are curated based on specific needs of the customers.

Customised solutions for entrepreneurs
Many affluent individuals are entrepreneurs with unique business-related risks. Insurance solutions tailored for business continuity, key person insurance, and succession planning help mitigate potential disruptions and ensure the sustainability of their ventures. In a VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world which we are living in, businesses have to plan for risks outside their business as well, which has seen emergence of tailored insurance solutions for this segment.

The role of insurers
To meet these evolving needs, insurance providers must adapt their products and services. Personalised underwriting, flexible premium payment options, and high-coverage limits are essential features for this segment. Additionally, insurers must leverage technology to offer seamless digital experiences, from policy purchase to claim settlement.

Beyond products, insurers must invest in advisory services, offering expert guidance on risk management and financial planning. Building trust and understanding the nuanced requirements of affluent clients are critical to ensuring long-term relationships.

The future of affluent insurance in India
As India’s affluent population continues to grow, their insurance needs will become increasingly complex. The rise of new risks—such as cyber threats and climate change—will further influence their requirements. Insurers must stay ahead by innovating and providing bespoke solutions that cater to these emerging demands.

Moreover, the growing awareness of sustainability amongst the affluent class presents opportunities for insurers to offer green insurance products, including policies that promote renewable energy and environment friendly practices.

The rise in India’s affluent population is reshaping the insurance landscape. By understanding their unique needs and delivering tailored solutions, insurers can not only cater to this growing segment but also foster a culture of financial resilience and risk management. As the affluent continue to play a pivotal role in India’s economic growth story, the insurance sector’s ability to evolve alongside them will be instrumental in shaping the future.