India life insurance ownership in urban areas at 73%

Urban Indian investors were attracted to more diverse life insurance products.

Indians residing in urban areas were found to invest more in life insurance, with 73% of those surveyed insured, according to the Max Life Insurance Company’s fifth edition of the India Protection Quotient 5.0.

“The respondents built a holistic portfolio by investing more in life insurance products including term (30%), market-linked (13%) and savings plans (38%),” the study said.

Rising inflation continues to be the main risk factor for urban Indians. However, saving and spending habits seem to return to pre-pandemic levels.

Habits such as saving and investing were only considered by 43% of the respondents. Whereas in the previous edition, 50% said they would allocate their money toward the habit.

Basic expenses inched up to 42% from 41% previously. While the interest to spend on luxury items significantly increased to 15% from 9% previously.

Urban Indians are particularly keen on saving up for their kids' education (60%), retirement (49%), and kids’ marriage (40%).

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The report also emphasised the alarming de-prioritisation of urban Indians toward Sum Assured and Rider Benefits, as they show more interest in Term plans.

“The survey also raises key issues on term plan purchase where 28% of urban Indians have associated the plan with high premiums, 17% feel the policy has hidden terms and conditions and 18% attribute it to challenges in receiving a refund in case of claim settlement,” the report stated.

In terms of channels, urban Indians buy term plans via insurance agents. Whilst 16% purchase through the internet.

“As more and more people in India become financially conscious about investment instruments, the financial impacts of unforeseen circumstances can be significantly reduced for the people we care about.” the report added.

The total respondents surveyed were 4,610 from the top 25 urban metros, Tier 1 and Tier 2 cities; Thus, the results are representative of the metro, Tier 1 and Tier 2 cities of urban India only (from November to December 2022).