When it comes to savings, most of the people in rural India want to have their money invested in safe products only, according to a survey. Accordingly, most of them have savings in Government schemes such as PMJJBY, Saral Jeevan, Pension Yojana, Subsidies, Farmer Insurance etc. This is followed by Gold ownership, Fixed Deposit/Recurring Deposits, Property and Public Provident Fund (PPF).
The “India Protection Quotient 5.0” survey by Max Life reveals that nearly 50% of people in rural India “only want to save in safe products”. It further found that saving for children’s education and marriage are the top savings objectives even amid multiple anxieties around savings and expenditures for the future.
The survey found that Government schemes occupied the lion’s share in mobilizing rural savings. Gold occupied the second position as respondents had 15% of their savings in the yellow metal, which was followed by FD/RD (12%), Property (9%), and PPF (3%). These numbers were revealed through a query on financial instruments of investment and financial protection currently owned by the respondents.
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The survey, which was conducted across 113 villages, found that 54% of respondents were aware of Gold as a saving instrument while the awareness for FD/RD was 42%. As many as 21% of the respondents were aware of PPF as a savings instrument. Interestingly, the awareness of Government schemes was highest at 83% among the respondents.
Consistent with the national trend of prioritizing savings over protection, rural households prefer savings instruments over term insurance plans, the survey found.
Aligning with their commitment to saving for their families’ futures, 64% of India’s rural population showcased an inclination to save for their children’s education, while 41% cited kids’ marriage as a savings imperative.
In the survey, 3 in 4 participants expressed concern over the depletion of their savings over the next ten years, while 1 in 4 was unsure about the savings corpus needed for the future.
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How rural India spends money
The survey found that rural India spends a major chunk of their income on basic expenditures with negligible allocation towards other discretionary expenses. The saving and spending pattern of rural India is different from urban India’s saving and expense allocation. While rural Indians divert 55% of their earnings towards basic expenses, urban India allocates only 42% towards this non-discretionary category.
Life Insurance barriers
The survey found that only 22% of the rural population owns life insurance products vs 73% ownership in urban India. As many as 4 in 10 respondents in rural India haven’t even thought of buying Life Insurance while 41% claimed they do not have enough money for insuring their lives.
The survey has highlighted that rural Indians are less aware of life insurance products compared to urban India.
As per the survey, nearly half of rural India’s respondents expressed concern over insufficient funds to purchase life insurance products.
On the other hand, 1 in 3 cited ‘high premiums’ as a significant barrier in life insurance purchase, and 1 out 4 respondents felt that the purchase process is cumbersome with multiple formalities. Similarly, 2 in 5 said they have not thought of buying life insurance to financially protect their families.