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Only 3 in 10 urban Indians buy term insurance plans: Survey

The IPQ is essentially the degree to which Indians feel protected from future uncertainties on a scale of 0 to 100, based on attitudes, mental preparedness about uncertainties, awareness and ownership of life insurance products, including term, endowment plans and ULIPs.

, ET Bureau|
Last Updated: Mar 09, 2020, 11.38 AM IST
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At 16%, the lowest penetration of term plans is in tier 2 cities.
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More people are buying term insurance in urban India, with ownership growing by 7 percentage points in the past year. Despite this, term insurance penetration remains at 28%, which means only three in 10 people are buying the pure protection plans, compared with 70% of life insurance ownership in the country. This was revealed by the second edition of Max Life Insurance’s flagship survey ‘Max Life India Protection Quotient’ 2.0, in association with KANTAR.

The overall Indian Protection Quotient (IPQ) has gone up 2 points from 35 to 37, while the Knowledge Index has shot up 9 points to 48 in metros, tier 1 and tier 2 cities. “Even though the rise in Protection Quotient is only 2 points, the rise in awareness is significant and will reflect in terms of ownership with a lag effect in the near future,” said Prashant Tripathy, Managing Director & CEO, Max Life Insurance.


IPQ score is higher, but insurance is still not enough
IPO-Score

The IPQ is essentially the degree to which Indians feel protected from future uncertainties on a scale of 0 to 100, based on attitudes, mental preparedness about future uncertainties, awareness and ownership of life insurance products, including term and endowment plans and ULIPs. The IPQ 2.0 survey was conducted among 7,014 respondents across 25 cities, including 6 metros, 9 tier I and 10 tier II cities, as opposed to the first survey which had 4,566 respondents across 15 cities.

Delhi and Hyderabad lead in IPQ scores, while South India is ahead among all four regions in terms of life insurance ownership and IPQ. Though the awareness about protection has risen in all cities, people are showing reluctance about buying insurance, with ownership declining in three cities and Chennai seeing the biggest fall of 6 points.


IPQ 2.0 score: Delhi tops with 47, Ludhiana at the bottom with 27
IPO-city


Insurance ownership: Patna has seen the highest jump of 22 points
Insurance-ownsership

At 16%, the lowest penetration of term plans is in tier 2 cities. In fact, tier 2 cities continue to feel the most insecure, with the lowest IPQ score of 32 and Knowledge Index score of 43. This low penetration could be attributed to the
Indian mindset, which seeks returns for investment. This is the reason that 68% Indians or nearly 7 in 10 individuals consider return on premium the most important benefit they’d like to have from their term plan.

Awareness about term plans is the highest
Awareness


Tier 2 cities are the least insured
Tier-II-city


Women in tier 1 cities are more aware than men
women


People know online term plans are cheaper, but still buy via agents
agents

Non-millennials, with an ownership score of 71 are ahead of millennials with score of 64, despite the fact that the awareness levels of the two about life insurance products are the same at 46.


Millennials are as aware as non-millennials, but buy less insurance
less-insurance


Agents are main influencers for both millennials, non-millennials
agents-1

Expectedly, working women have a lower IPQ score of 34 and ownership score of 64 compared with working men, whose respective scores are 36 and 69.

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