Right Life Insurance: Perception vs Reality
Perception is reality!
Life Insurance sector is no exception to this fact. So how is life insurance perceived by the general public? It is not an understatement to say that a vast majority perceives life insurance as a complex product and often time does not have a good understanding of what they need.
Many people are still grappling with basic facts of life insurance, what it entails and how it is different from other financial products. Life insurance is actually simple enough, if you know what you need.
Having spent the last 1.5 years as a part of the Indian life insurance sector, I have been presented with the opportunity to constantly interact with all the parties involved, be it customers, distributors or claimants.
A few weeks ago, I visited a family in a small town on the outskirts of Mumbai. The policyholder, the sole breadwinner of the house, passed away recently and is survived by his wife and two kids. The wife is a homemaker and the kids are barely into school yet.
I entered their shanty-like house and offered my condolences. As we began talking about their financial condition, I discovered that the wife was unaware about how much funds would the life insurance settlement provide or which policy her husband had bought. She was just mildly relieved and under the impression that the life insurance policy her husband has bought will help her overcome any financial needs in the future.
The family will receive 2 – 3 lakh rupees after the life insurance claim is settled. Considering the fact that the wife is a homemaker, and her kids are yet to complete their education, a settlement of about 3 lakhs will barely tide over their long term needs.
I have encountered several such stories that make the importance of life insurance glaringly obvious. People are inadequately prepared before they buy a life insurance policy. One has to have answers to questions like do I need a life insurance, what are my financial needs (who is dependent on me?), what are my liabilities, what financial risks is my family likely to face in the future?
In most cases, people do not have the answer to these questions and end up buying a policy that does not fully serve its purpose. Life Insurance is not just a small term solution but a long term one. Finding the right answer to these questions is extremely important. The statistics with Indian household facing a 92% under-insurance gap for life insurance also emphasize this point,
I believe that the onus also lies with us – the life insurance companies – to ensure that we are not simply product pushers but help our customers make an informed choice. This means creating easy to understand products and providing transparent online information and advice to create an environment where consumers can make up their own mind and decisions.
It is undeniable that the reality bites, but with the right insurance it can be sweeter still!