78% Indians Believe Insurance Plays an Important Role In Financial Planning Reveals SBI Life’s Financial Immunity Survey 2.0
The pandemic swept in a lot of uncertainty along with the novel coronavirus. Globally, not only did a lot of people lose their jobs, a lot of people had to deal with pay cuts or a lot worse like loss of loved ones. India was no different. Today, with majority of the population being fully vaccinated and a lot of efforts being put into seeing that the rest receive vaccines soon, the lessons that Covid-19 taught us are not going to be forgotten anytime soon.
“Immunity” was the buzzword for the past two years. As the virus attacked our vulnerabilities, both physically and financially, most people actually started putting efforts into fortifying both. Along with physical immunity, we also realized that it was important to safeguard our financial immunity, for us to be able to tackle with the ups and downs of life uncertainties.
Financial Immunity Survey 2.0
SBI Life Insurance recently conducted the Financial Immunity Survey 2.0 in association with the Nielsen IQ (India Pvt. Ltd.) Company, in order to decode the evolving behavior of Indian consumer towards physical and financial immunity, on the backdrop of the ongoing pandemic. It brought to fore some interesting results. According to the findings of the survey:
- Though vaccines have proven to be highly effective in preventing hospitalization and death, the top 3 things that worry Indians are:
- Rising medical/ treatment cost - 59%
- Instability of jobs - 59%
- Concerns around health of self and family members - 58%
- 79% of the Indians have faced income reduction of which 44% of Indians’ income has come back to normal, while 35% of the Indians are still facing income cut
- 57% of the Indians feel ‘Financial Immunity’ is equal to ‘Being financially secure and stable’
Building a strong Financial Immunity – Need of the Hour
The only good thing about the pandemic was it made people realize the importance of being physically and financially fit; and majority of the population started taking steps in the direction to strengthen both.
Financial immunity empowers one to conquer the challenges posed by the pandemic. The survey also revealed that 80% of Indians feel strongly prepared with respect to physical immunity needed to combat the effects of COVID-19. Realizing the importance of having a strong financial base in these uncertain times, 3 out of 4 Indians have increased their savings/ investments since January 2021 and 50% of them plan to use that money to either save, or invest, or buy insurance.
Though insurance companies and financial planners have been emphasizing for years on having adequate insurance as a base for any sound financial plan, it was the pandemic that proved to be an eye opener for many; 46% having invested in health insurance and 44% having invested in life insurance for the first time after March 2020 outbreak and 56% having accumulated emergency funds.
78% Indians think insurance is extremely important
With a majority of Indians having woken up to the fact that they need to build financial immunity, 78% Indians feel that insurance in extremely important in the overall financial planning process. In addition, 70% of the Indians strongly feel that life cover should keep on increasing when prominent life milestones such as marriage, childbirth, buying a home, etc. are achieved.
Most people feel that a deep-seated foundation provided by insurance in terms of a guaranteed sum assured to safeguard the financial needs of the loved ones, is unmatched. Experts also agree that no other financial product provides such an assurance, let alone the fact that insurance provides it regardless of market fluctuations, interest rate movements or any other external factors whatsoever. This makes insurance a unique cost-effective base for any financial plan.
India largely remains under-insured
The goal of a life insurance cover is to provide financial security to the family of the policyholder in case of untimely demise of the insured. In case the sum insured by the policy is not adequate and can lead to financial crisis. This is termed as under-insurance - a condition where the life insurance cover is not enough to address the financial needs of loved ones and safeguard the family's future needs.
The pandemic has reinforced the need for insurance because of the growing financial burden, owing to rising medical/treatment costs versus a reduced income or loss of livelihood. While most Indians believe that insurance is important and feel they are adequately covered, this feeling of adequacy is far from the truth. As per SBI Life's Financial Immunity Survey 2.0, most people are under insured with their average insurance cover being only ~3.8 times their annual income. However, this is far lesser than the recommended value, according to which the insurance cover should be in the range of 10 times to 25 times one’s annual income and hence there is need to relook at your family’s needs and do financial planning accordingly.
Though the paranoia surrounding the pandemic has reduced considerably, the human race is still battling to adapt to the new normal. What is reassuring is that behaviors, attitudes and mindsets in India today are fast evolving to build not only physical but also financial immunity.
Disclaimer: This article has been produced on behalf of SBI Life by Mediawire team.