First, many consumers perceive no need for insurance in view of a substantial improvement in the mortality of the Indian lives. It is true that mortality has improved three times in the last 61 years. For instance in 1935 out of one lakh policy-holders aged 30 years, 465 died within a year but this number has come down to 117 in 1996. Yet the need for death-risk cover has not been totally eliminated. It is amply proved by the experience of LIC for the year 1997-98 as it has settled two lakh death claims during this year. One third of deaths of policy-holders in this lot occurred within two years of the commencement of policies. Further 19,000 deaths were caused by accidents and majority of policy-holders in this group were below 35 years of age. The incidence of death has come down but still a large number of deaths are occurring. Hence financial provision for family in the event of untimely death through insurance is undoubtedly a basic need of the Indian consumers.

Second, the consumers believe that investment in life insurance is not desirable as the yield on the premia is very low. It is correct that yield on most of the insurance products is in the range of 7 per cent to 8 per cent only. However, this traditional concept of investment totally ignores the invisible yield on the death-risk coverage. For example, a policy-holder aged 30 years for an endowment assurance of 25 years will pay an yearly premium of Rs 4,000 only for a sum assured of Rs 1 lakh. In case he dies after two years, his wife will get Rs 1 lakh in settlement of death claims against Rs 8,000 premia paid for this policy. However, if the same consumer makes investment in the recurring deposit of a bank of Rs 4,000 per year, his wife gets only Rs 8000 plus interest after two years. Hence the insurance claim amount is much higher than the bank deposits. This applies to other savings as well. Hence investment in insurance has an edge over other savings in the event of the death of the consumers.

Third, many consumers have a notion that life insurance is only to extend cover for death risk and it has nothing to offer in the event of the long survival. It is obviously not correct and is amply repudiated by the experience of the insurer. LIC, for example, has settled 10 lakh maturity claims but only tw lakh death claims during 1997-98. It means that the death claims have accounted for only 17 per cent while maturity claims for 83 per cent in the total number of claims settled for the year. Clearly the overwhelming majority of the policy-holders had the longer span of lives much beyond the maturity terms of the policies and the retirement age of 60 years. The average span of life for Indians was 32 years in 1951, but has increased to 62 years in 1998 and is expected to cross 76 years by 2031. Hence the current working consumers have to make financial provision for themselves for 20 years after retirement. This need can be catered for consumers if they buy suitable pension products. Further in the oldage, expenses on health care will be pretty heavy. This can be provided by purchasing health insurance including long-term care product. The provision of pension and healthcare will ensure a happy old age for the consumers.

Fourth, most consumers purchase one insurance policy of a modest amount and falsely feel secured under the protective umbrella of insurance. This is amply supported by the analysis of LIC's sold policies for the year 1997-98. During the year, the size of 76 per cent sold policies was Rs 50,000 or below. Only 5 per cent of the sold policies were of Rs 1 lakh or more. Clearly the existing lot of LIC's policy-holders is grossly under insured. With the galloping inflation, the value of a policy of Rs 50,000 after 20 years will be very negligible. Hence the consumers are to be educated on the appropriate amount of insurance of the right types to fulfil the future needs. Normally the sum assured equal to the five times of the annual income of the consumer should be treated as the adequate insurance cover.

Fifth, consumers treat the advice of agents as the best to purchase the insurance products. It may not always be correct as most of the agents are attracted to sell those products where rates of commission payable to them are higher. Hence at times there can be a clash between the interest of the consumers and the agents. The only way out is the consumer's education for the insurance products so that he can make a correct choice. With the opening of the insurance sector, rival channels like brokers, IFA, corporate intermediaries, bank's branches etc, will emerge in the insurance market. This will help consumers to get expert advice to purchase insurance products which may serve their needs.

The promotion of the consumers' awareness for the insurance products is necessary to protect the interest of the consumers. It can be done by insurers, insurance intermediaries, consumer's organisations and the media. Only then will the Indian consumer emerge as kings in the liberalised insurance market.