Higher propensity to purchase insurance in tier-2 and 3 cities after Covid: Survey
- Out of the respondents who had contracted Covid, 25% were hospitalized. The survey found that 18% of them ended up spending over Rs 15 lakhs, and 22% were not adequately covered by their existing policy.
- As of April 2022, 60% of the respondents had an active term insurance policy. While 55% of people prefer term insurance, 24% want enhanced protection over.
Similar trends were observed in term insurance, where 59% of respondents who want to increase their coverage belong to tier-3 cities compared to 26% of tier-1 towns. The survey results point toward the sense of urgency spurred by the pandemic concerning insurance awareness across the country.
Out of the respondents who had contracted Covid, 25% were hospitalized. The survey found that 18% of them ended up spending over Rs 15 lakhs, and 22% were not adequately covered by their existing policy.
As many as 62% of the total respondents had an active policy and didn't just depend on their corporate cover. The figures also vouched that Covid had acted as a catalyst in health insurance purchases. While 50% of these policies were bought after Covid's first wave, 41% were purchased after the Delta wave. Also, 80% of these policies were family floater plans.
A significant proportion of 84% of respondents did not have to serve a cooling-off period. Earlier, a cooling-off period of 3 to 6 months was applied wherein people recovering from Covid could not buy a policy before completing this. These figures demonstrate the insurers' effort to expand the safety net and ensure maximum protection.
Term insurance overview: As of April 2022, 60% of the respondents had an active term insurance policy. While 55% of people prefer term insurance, 24% want enhanced protection over and above their existing life insurance policy.
The purchase trends bear quite a stark resemblance to health insurance. While 47% of the active term policies were bought after the first wave, 40% were purchased post-second wave. While the pandemic might have triggered the purchase of the policy, as many as 78% of respondents want to continue the policy even as things begin to get back to normal.
Investment Overview: Evident shift from tax-saving to wealth creation Conventionally, most buyers have invested in insurance to save tax. However, the survey responses indicate that 54% of the respondents are consciously choosing investment-cum-insurance products for wealth creation. Also, 50% of the respondents were impacted financially due to Covid.
Talking about the propensity to invest, 3/4th of the respondents save or invest their income. However, the amount invested by 53% of them is below the recommended benchmark of 30% of the total income.
One noteworthy finding here is that the propensity to invest appears to be higher among females. It is concluded that 30% of females save or invest over the recommended benchmark of their monthly income as opposed to 20% of males. This translates to people now seeing insurance-cum-investment products beyond a mere tax-saving tool and making them a part of their portfolio to gain better returns on their funds.