Tuesday, 19 June 2018

Grossly Under Insured Indians Are Living Dangerously !

Even if we assume that many customers buy more than one policy, on an average an Indian is certainly not covered beyond Rs.4 lakh.

How many INDIANS are covered by Life Insurance?

According to Irdai's Hand - book 2016-17 (Table 9A), 32.81 crore of policies are in force in the books of life insurance firms in India. Even if we assume that a few lakhs of policies were revived during the year, the total number of in-force policies will not be more than 33 crore.
Since many customers are in possession of multiple policies, the total number of people possessing at least one in-force policy will not be more than 30crore.If we consider those people who are covered by group policies and PMJJBY policies and not by individual policies, even then the number of Indians holding  at least one in-force life insurance policy is not likely to exceed 40 crore (with PMJJBY covering 5.35 crore Indians so far).

Indians are grossly underinsured

So how many people are insurable today? According to most estimates, the figure will be around 80 crore. So, 40crore Indians have not yet been brought under the ambit of life insurance. In developed countries, at least 90% people are covered by life insurance. Besides, they enjoy various other social security benefits.
Now, the more important question is whether Indians who are considered as insured are adequately insured. If we take the Handout's Tables 9A and 10A together (in respect of linked and non-linked life policies), we get the figure of sum assured per policy. The average sum assured is just  Rs.3.01 lakh. Even if we assume that many customers buy more than a policy on an average an lndian is certainly not covered beyond Rs.4 lakh.

What is the value of that money today?

If we keep the money in a bank (that is what the dependants of a deceased policyholder generally does), it will not fetch more than Rs.228,000 a year or about Rs.22,300 per month! To run a family of three to four members with that money is extremely difficult. When a government social security scheme such as PMJJBY is offering an insurance cover of Rs.2 lakh per person, the much more affluent Indians are getting themselves insured for Rs.3-4 lakh only. That means, on an average, Indians are grossly under insured even today.

Too many people buying Ulips

Life insurance industry has brought a plethora of useful insurance products for all life stages and for all market segments but customers have not yet made full use of these products. Far too many customers are buying only unit-linked insurance policies (Ulips) which help in accumulation of wealth. Most Indians primarily need life insurance as savings and protection tools. As more than 90% Indians work in the unorganised sectors, they need to build their risk-free savings corpus through life insurance. They also need protection products like pure term insurance.  Although LIC continues to get more than 99% of its business by selling traditional products, the private companies as a whole got 42% of their business by selling Ulips only in 2016-17. A leading private insurer got more than 79% of new business from Ulips. The problem with Ulips is that as soon as people get good returns from their investments, they surrender the policies (the surrender charge being negligible)and insurance cover ceases to exist for them. Term insurance is a good product but that gives money only under one contingency death. People need to buy other insurance products which provide money (without any uncertainty)in other contingencies  as well. So, it is pretty dear that Indians are grossly under insured and that means they are living dangerously.

Read Full Coverage Visit: LifeLine Insurance & financial Expert

Thursday, 7 June 2018

Guide To Buying A Term Insurance Plan- Compare Features, Not Just Premiums !

A term life insurance plan protects your financial dependants in case you die, a health insurance is a must for every individual given the rising incidence of ailments and high medical costs.

You may not be as fit in your 50s as you were in your 20s. That’s a fact of life: as you grow older, your body shows signs of wear and tear and you need more medical care than before.

Research shows that heart ailments and cancer account for over half of casualties among Indians. In fact, India has the highest rate of cardiac arrests in the world and every 13th new cancer patient is from India, research suggests.

A health insurance policy pays for your hospital bills and life insurance provides timely financial support to your loved ones after you die. Both are important covers to have and we tell you who needs these policies, how much and how often one needs to review the cover.

LIFE COVER (Who needs it and when)

Not everyone needs Life Insurance. Children and young adults who are not working and retired individuals come under this category and that’s because they don’t have anyone depending on them financially. The working class that provides for children and often older parents that needs life insurance; in fact buying life insurance needs to be a priority for this generation. 

How much cover do you need

India, the younger you are, the higher cover you need. “The thumb rule says 10 times the annual income, but the actual need could be between 10 and 25 times".

A cover of 10-25 times your salary may look huge to you now, but if you factor in the time value of money, you will realize it won’t be all that big many years down the line. “If you are a salaried individual, insurers can give a cover up to 20 times your annual income. So, opt for a higher cover early on. Then you need not review your life cover often. A relook is needed when you have a baby or once in 10 years".

HEALTH COVER (Why do you need it)

Everyone needs Health Insurance and that’s because the cost of medical treatment is High. “While diseases may not be much of a concern for young people, accidents can still happen. They need health insurance to financially protect themselves against hospitalization due to accidents or even infection.

Such cases of hospitalization can work up a neat bill. For instance, dislocation, sprain and strain of joints and ligaments that needs surgical intervention or fracture of the leg needing surgery can cost up to Rs.4 lakh in metro cities and up to Rs.2 lakh in non-metros.

Which plan should you buy

If you are single and working, you can start with an individual policy. Once you get married, increase the cover by buying a floater policy. “A floater policy works best for a family in the same age group. But if there is a large age gap between the spouses or if parents need health insurance as well or if a family member suffers from ailments like diabetes, then individual insurances for these members may be better”.Infants and young children can be added to a floater policy.

How much cover do you need

A health insurance policy is a must but it’s equally important to understand how much you need to buy. It’s also important to get this right because as you grow older you may contract ailments and then it’s an uphill task to get insured. It’s always a good idea to have your own health policy but how much will depend on various factors.

For More Details Visit: LifeLine Insurance & Financial Expert

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