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National Insurance Awareness Day 2020

Jun 26, 2020 | 2 weeks ago | Read Time: 3 minutes | By iKnowledge Team

National Insurance Awareness Day 2020 falls on June 28 and acts as a reminder of the significance of insurance. Insurance products shield your loved ones from the harsh uncertainties of life and help recover losses from unforeseen damages. Securing your homes, cars, and livelihood, insurance is the safety net that assures a fallback in the face of unfortunate outcomes. And insurance awareness day encourages us to assess our insurance decisions for the adequate coverage of our family and properties. 

Insurance Awareness Day 2020

Insurance awareness in India – India is at risk.

With insurance penetration at only 3.7% in the 2018 financial year, India faces a substantial insurance gap. An insurance gap is a disparity between the coverage people buy and the amount they need. A Swiss Re report ranks India’s life insurance gap as the second-largest in Asia. An IndiaSpend study reveals that over 75% of the Indian population lack any form of life insurance. Moreover, an average wage earner commonly acquires only 8% of the sum that should provide satisfactory income replacement in case of eventualities. 

National Insurance Awareness Day aims at disseminating knowledge about insurance and its benefits. The goal is to ensure that Indians do not face hardships in the face of unfortunate events due to the deficiency of proper insurance knowledge. Keeping this in mind, we have also launched COVID-19 Insurance. Understanding the importance of a dedicated awareness day involves a better perception of the insurance gap’s reasons.

Why are Indians lagging in insurance coverage?

  1. Lack of awareness

The main reason behind Indian’s apathy to buying insurance is the lack of insurance awareness. Buying motor insurance is mandatory by law. But other insurance like term insurance products remain push-sale items, mainly driven by the advice of third-party agents. Often such agents market products that bring profits for themselves instead of addressing the customer’s needs. Research by LexisNexis Risk Solutions reveals that only 36% of life insurance consumers conducted extensive research before purchasing policies. Conversely, 58% of customers buying directly from the insurer carry out sufficient research. 

  • Lack of clarity

The terms and conditions, and benefit structures, remain challenging to comprehend for a majority of Indians. 29% of the respondents in the above-mentioned LexisNexis research disclosed that they find insurance policies complicated. Thus, people rarely understand which products would suit their requirements. 

  • Lack of proper perception 

The traditional perception of insurance is that it is a tax-planning tool rather than risk protection. This factor often blocks insurance reach in rural areas and across the self-employed sector with irregular incomes. Besides, unpredictable income makes expenditure on insurance premiums appear unnecessary and cumbersome. Although several schemes are available that cater to the needs of the economically vulnerable population, they remain unaware of such plans.

Importance of insurance awareness 

Increased awareness is the only means to bridge the gap between insurance needs and insurance purchases. Herein lays the relevance of observing the insurance awareness day.

1. You can use the occasion of the insurance awareness day to find out about the different offerings available to suit every financial need. You can search online about the variety of insurance products, the different benefits, prices, and add-ons. It can help you plan your finances effectively. 

2. The insurance awareness day is a platform that insurers can utilize to educate the population about insurance. Simple policy wording can help better benefit illustration and improve consumer perception. Also, guidance about the correct coverage can help consumers in buying adequate insurance.

3. Technology improves transparency about insurance. Buying through insurer’s websites can prevent mis-selling and allow automation of purchase.  Online support also makes claim settlement processes hassle-free. Thus, awareness about technological support available in the modern insurance sector is also essential. This insurance awareness day you can increase your own awareness and help spread the knowledge as well. If you are in contact with any individual who needs assistance with technology, you could solve their queries. You can also help them in realizing the need for insurance and estimate the coverage amount sufficient for them.

4. Insurance awareness involves the consciousness that insurance is not a tax-saving option only. Life insurance plays several roles, such as 

  • The means for subsistence for a breadwinner’s family in case of a premature loss 
  • A viable solution for wealth creation 
  • A vital source of regular income after retirement
  • An effective defence mechanism against financial losses arising from accidents and other adversities

Moreover, the availability of flexible premium payment terms can tackle any strain on resources. 

National Insurance Awareness Day is an appropriate time to recognize your insurance needs and invest in the right product. 

Conclusion 

This National Insurance Awareness Day review your existing insurance policies. It will help you to identify any gaps in coverage. Determine if your insurance needs have changed with changing life circumstances, like increased family members or advanced age. Also, evaluate your current investments and determine if any modifications are pertinent. Insurance awareness will help you prepare better against the unpredictability of life. Therefore, set aside some time and update your policies to safeguard your loved ones’ financial future. 

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