Life Insurance Penetration in India is Hardly 3.4%. Firstly the Penetration figure is extremely low and to top it we may find a very small percentage of the Insured people having the right amount of cover.
Yes it is true. I ask a lot of people if they are Insured and the coverage amount. In rare cases I find people having the right coverage. Imagine somebody earning 75000 per month and having a Life cover of Rs. 10 lacs or anybody earning 40-50000 a month having a 5 lacs cover. God Forbids if he dies is the cover sufficient to cover his family needs. Answer is no. The money finishes in some months / years. So while taking Insurance along with Premium it is the cover that really matters. Else I would say that the person is not covered.
Insurers widely advocate the concept of Human Life Value. Almost all Insurer website will have a Human Life Value (HLV) calculator. This is even a part of Insurance Tutorials. However while advising a client it is seldom used.
A lot of advisers & distributors (to be read as advisors henceforth) combine Insurance and Investment for the sake of revenue associated. Of course some products have whopping high revenues. I personally feel it is not justified in the interest of client. Insurance by concept has been a risk cover and not investment. However Insurance products of late are structured with an Investment component. Well nothing wrong technically but this takes away a major chunk of coverage from the Product. At the same time it also incurs heavy charges thus leaving very little benefit for investors. Of course a major portion of this charge also goes to the advisor in the form of commission. But then that is the way the industry works!!!
Life Insurance is a complex product and not everybody understands it. At the same time it is also the bread and butter for many Agents especially LIC which has a very deep presence in Rural areas. Still I feel there are very few Life Insurance products which are of immense benefit to the consumers. If I have to rate anything I feel Online Term Insurance the recent offering by most insurers is the best. Low cost and High coverage. Very few understand the calculations of benefits associated with Online term cover and at the same time being restricted to online its reach remains limited even in big cities.
Insurance has been a distribution oriented Industry and is the bread and butter for a lot of Agents. It is also a source of good revenue for Banks and other Distribution channels. Online products cannot replace Agents and other Distribution channels. Insurance is a must have product for anybody and everybody and an integral part of Financial Planning. I believe there is a need for structuring products which are heavy on coverage for the consumers. How it happens is yet to be seen and involves considerable brainstorming. Structuring of Life Insurance Products heavy on coverage might have a dent on the advisor commissions but in the longer run will be beneficial for consumers and in turn for the advisors. With client Insured adequately the Advisors will have a free hand in Planning the investments. But if I have to talk about the consumer interest I feel a lot of existing products do not justify the concept of right coverage. Supporters of these products on the other side will have multiple reasons to prove me wrong. But if we look at the broader picture they hardly satisfy the consumer interest of being "Insured". Waiting to watch the change happen.... To close it on a positive node I believe it may take some time but it surely will happen.
(Views are personal)
Yes it is true. I ask a lot of people if they are Insured and the coverage amount. In rare cases I find people having the right coverage. Imagine somebody earning 75000 per month and having a Life cover of Rs. 10 lacs or anybody earning 40-50000 a month having a 5 lacs cover. God Forbids if he dies is the cover sufficient to cover his family needs. Answer is no. The money finishes in some months / years. So while taking Insurance along with Premium it is the cover that really matters. Else I would say that the person is not covered.
Insurers widely advocate the concept of Human Life Value. Almost all Insurer website will have a Human Life Value (HLV) calculator. This is even a part of Insurance Tutorials. However while advising a client it is seldom used.
A lot of advisers & distributors (to be read as advisors henceforth) combine Insurance and Investment for the sake of revenue associated. Of course some products have whopping high revenues. I personally feel it is not justified in the interest of client. Insurance by concept has been a risk cover and not investment. However Insurance products of late are structured with an Investment component. Well nothing wrong technically but this takes away a major chunk of coverage from the Product. At the same time it also incurs heavy charges thus leaving very little benefit for investors. Of course a major portion of this charge also goes to the advisor in the form of commission. But then that is the way the industry works!!!
Life Insurance is a complex product and not everybody understands it. At the same time it is also the bread and butter for many Agents especially LIC which has a very deep presence in Rural areas. Still I feel there are very few Life Insurance products which are of immense benefit to the consumers. If I have to rate anything I feel Online Term Insurance the recent offering by most insurers is the best. Low cost and High coverage. Very few understand the calculations of benefits associated with Online term cover and at the same time being restricted to online its reach remains limited even in big cities.
Insurance has been a distribution oriented Industry and is the bread and butter for a lot of Agents. It is also a source of good revenue for Banks and other Distribution channels. Online products cannot replace Agents and other Distribution channels. Insurance is a must have product for anybody and everybody and an integral part of Financial Planning. I believe there is a need for structuring products which are heavy on coverage for the consumers. How it happens is yet to be seen and involves considerable brainstorming. Structuring of Life Insurance Products heavy on coverage might have a dent on the advisor commissions but in the longer run will be beneficial for consumers and in turn for the advisors. With client Insured adequately the Advisors will have a free hand in Planning the investments. But if I have to talk about the consumer interest I feel a lot of existing products do not justify the concept of right coverage. Supporters of these products on the other side will have multiple reasons to prove me wrong. But if we look at the broader picture they hardly satisfy the consumer interest of being "Insured". Waiting to watch the change happen.... To close it on a positive node I believe it may take some time but it surely will happen.
(Views are personal)
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