Growing Gap in Term Insurance Coverage
A significant 50 percent of Indians still avoid purchasing term life insurance, with a staggering 87 percent of them underestimating the financial support their family would require in the event of their untimely passing. This insight comes from the ‘How India Buys Insurance 2.0’ report by Policybazaar, which highlights the lack of awareness and accessibility as the primary factors preventing wider adoption of term insurance products in the country.
While the penetration of term insurance has seen growth—rising from 15 to 29 percent in recent years—the report suggests that much of this increase is attributed to real-life claims stories that have helped individuals realize the potential impact of term insurance during times of crisis. However, the report also highlights that cost remains a major barrier, particularly among younger individuals and those with inconsistent income sources.
Highlights:
50% of Indians skip term insurance.
87% of non-buyers underestimate the financial support needed by their families.
Term insurance penetration has grown from 15% to 29% recently.
Cost remains a significant concern, especially among the younger population.
Medical Insurance: A Growing Priority Amid Rising Costs
While term insurance continues to face hurdles, health insurance is becoming a higher priority for many Indians, largely due to personal experiences with escalating medical expenses. According to the report, medical bills now account for the second-largest household expense, second only to food. The increasing frequency of high treatment costs has pushed health insurance to the forefront of consumers’ minds.
A key issue highlighted in the report is the underestimation of medical treatment costs, with consumers generally underestimating healthcare expenses by over 50 percent. With healthcare inflation standing at 14 percent, the rising costs of medical care are becoming unsustainable for many families.
Highlights:
Medical bills are the second-largest household expense after food.
Healthcare inflation at 14% continues to drive up treatment costs.
Consumers tend to underestimate medical expenses by over 50%.
Rising Demand for Supportive Services in Health Insurance
A notable shift in consumer behavior has been the growing demand for “dedicated claims assistance,” which is now considered one of the top features that buyers look for in a health policy. This feature is even more valued than brand recognition, reflecting a desire for more clarity and support during the often confusing and stressful claims process.
The report also indicates regional variations in consumer priorities. For instance, in South India, trust and support services are the most valued aspects of insurance policies, while in the North, high coverage is the primary concern.
Highlights:
Buyers prioritize “dedicated claims assistance” in health insurance policies.
Trust and support services are the top priorities for consumers in South India.
In North India, high coverage remains the foremost concern for insurance buyers.
Digital Platforms Gaining Ground in Insurance Decision-Making
The report also reveals a significant shift towards digital platforms as the primary source of information for insurance buyers. Digital channels now surpass traditional methods such as agents and in-person consultations in providing reliable insurance information. This growing reliance on digital platforms suggests that consumers are increasingly seeking more accessible and transparent ways to navigate the insurance landscape.
However, one recurring issue across both term and health insurance remains the complexity of policies. Many consumers report difficulty in understanding the jargon-filled terms and conditions, which, according to the report, leads to delays or complete avoidance of insurance products.
Highlights:
Digital platforms are now the most trusted source of insurance information.
Consumers face difficulties in understanding jargon-filled policies.
Increased reliance on digital channels for insurance information.
