Chennai’s India Protection Quotient of 42 higher than the national average but only 1 in 4 own term insurance, reveals Max Life Survey
* At 86%, life insurance ownership of Chennai highest in the country but only 1 in 4 own term insurance
* Term insurance only makes up a poor 28% of the total respondents of the survey in the city
* 55% not financially prepared to deal with unforeseen future uncertainties like death & critical illness in the city
Chennai, May 2019: Max Life Insurance, one of India’s leading private life insurers, today unveiled that 86% of the Chennai’s population owns life insurance, making it the most insured city in the country. As per the ‘India Protection Quotient’ survey conducted by Max Life and Kantar IMRB, Chennai stands at a Protection Quotient of 42 out of 100, greater than the national average of 35 for urban India. This three dimensional survey determined policyholders’ level of financial preparedness to face future uncertainties, by studying their life and term insurance awareness, ownership and primary fears, preferences and triggers when purchasing policies.
V Viswanand, Deputy Managing Director, Max Life Insurance said: “By virtue of Chennai being one of India’s most rapidly burgeoning cities, it ranks higher on life insurance protection and knowledge index scale of our ‘India Protection Quotient’ survey. While in comparison to other leading cities, Chennai has the lead in the number of life insurance owners, it lags marginally in term insurance uptake. The same evokes a slight worry as term insurance is the cheapest and most fundamental form of financial protection. There is definitely scope for the citizens to re-align their approach to life insurance by understanding the true value of protecting one’s family from the uncertainties of life. We’re certain that the survey’s compelling findings will help bring about change in the underlying attitudes and overall behavior of people around life insurance.”
Chennai among the cities to rank highest on life insurance protection and knowledge index
While the Protection Quotient (the degree to which one feels protected and mentally prepared for future uncertainties on a scale of 0-100) for urban India stands at a modest 35, protection quotient of South India stands at a relatively higher 38. Chennai’s protection quotient of 42, ranks the city higher on the scale in comparison to other leading cities such as Ahmedabad, Bangalore, Mumbai, Lucknow, Vishakhapatnam, Kolkata, etc.
Additionally, with a knowledge index score of 47, citizens of Chennai were found to be more aware of insurance as a category than the country as a whole (knowledge index score of 39).
Poor term insurance ownership of 28% of the total respondents in the city, almost half the city’s population unaware of its benefits
Against the national average of 65% life insurance ownership, the survey revealed that South India owns more life and term insurance (74% and 24% respectively, when compared to east (72% and 24%), west (57% and 16%) north (59% and 22%) and the country on a national level (65% and 21%).
86% of the Chennai’s population owns life insurance, the most in the country. However, with term insurance ownership only making a paltry 28% of the total survey respondents, the city is grossly underprepared to face the financial instability caused by eventualities of life. Term insurance awareness however stands at a higher 51% in comparison to urban India’s level of awareness of 47%., indicating existence of barriers in the way of uptake.
City not financially prepared to deal with critical illnesses
With relatively higher life insurance awareness and ownership, the South India feels that savings will last longer than that of the rest of India. The survey brought to light that Chennai underestimates the cost of Critical Illness and is underprepared to battle a health crisis.
39% of the city’s population believes there will be no one to support them financially if they were to be diagnosed with a critical illness. 90% are not even aware of the treatment costs of diseases. Only 4% realized that critical illness can prey upon the family, whereas 54% have not even thought about it.
28% of Chennai feel that their savings would last less than a year if critical illness or death was to befall. About 40% of the city’s population feels they have no one to support them in the event of critical illness or death.
The insurance and savings gap between men and women in South India remains notable
In urban India, the ownership of life insurance and term insurance is also lower in females as compared to males. While 59% of women as against 68% men in urban India own life insurance policies and only 19% women are term insurance owners in comparison to 22% men.
The survey also pointed at a massive life insurance gap among the men and women of South India. While 64% women own life insurance as compared to 79% males, term insurance ownership among women in the region is also a lower 22% as compared to 25% men who own term plans.
Similarly, while 40% of women’s earnings in South India is being diverted to basic expenses, males are only spending 37% of their earnings towards basic expenses, leading the former with lesser to spend on savings and investments in comparison.
The savings objectives of women in the region are also are mostly concentrated, where close to 75% women save for kids’ education and 53% save for kids’ marriage, only 46% men save for both kid’s education and marriage.
Saving for financial future, old age security not a priority for millennials in South India
The survey found that Urban Indian Millennials in the age group of 25 – 35 years are seen to spend on travel, luxury, with nearly 43% not even thinking of protection of their families. Only 44% of youth are aware of term insurance and just 17% own it. It was found that an alarming 22% of urban Indian youth do not even consider buying a life insurance policy due to other investments that they have In South India too, the young and the affluent do not prioritize protection. Millennials in the region spend more on items like buying a house (53%), as against saving for retirement/old age security (44%) or to provide for family in case of medical emergencies or death of the breadwinner (22% and 33% respectively). Only 43% of millennials are aware of term insurance and just 22% own it.
Impact on their current lifestyle and children’s expenses among the greatest fears pushing South India to think about term insurance
The survey revealed that for more than 50% of urban Indian the biggest fears related to the demise of the breadwinner are financial insecurity and impact on their current lifestyle.
In comparison, it was found that 54% of South India’s biggest fear relate to the sustenance of current lifestyle for the family and finances for children.
The IT hub of the country still prefers to purchase term insurance from agent advisors
79% of urban Indians would prefer to buy term insurance from agent advisors and another 15% from their banks. Despite being touted as the IT hub of the country, 82% of South India’s population would prefer to buy term insurance from agent advisors, 15% from banks and 3% online.