In the recent Balasore train accident, close to 300 people lost their lives. Almost none of them had purchased an accidental insurance coverage of Rs 10 lakh at the time of buying the tickets. This speaks volumes about the level of risk awareness in the country.
There was a silver lining, though. Many of them had been insured under Jan Suraksha schemes of the government and that fetched some money for the family members of the deceased passengers. So, people are ready to pay a very small premium — Rs 426 for Pradhan Mantri Jeevan Jyoti Bima Yojana and Rs 20 for Pradhan Mantri Suraksha Bima Yojana — for an insurance coverage of Rs 2 lakh each.
Low insurance awareness
Indians need to look for more comprehensive insurance products that ensure better coverage. Only 8- 10% rural Indians are in possession of insurance policies. Even in the bigger cities, not more than 60% of insurable Indians are insured. So, 40% of those who are capable of buying insurance are either delaying purchase of insurance or have preferred to do away with it.
The question is not of income but of mindset. The insurance intermediaries are happy to push products at their old clientele again and again. Those who need to be made aware of their risks through persistent efforts are forgotten after a couple of visits.
The root cause of the low insurance penetration is that people fail to consider money management skills as a major life skill that can help attain greater success and stability in life. When it comes to buying insurance, they keep on delaying the purchase under one pretext or other. The knowledge workers earning very well in tech and tech-enabled sectors are also suffering from the lack of knowledge of financial products in general and life insurance in particular.
Insurance is never unaffordable
Insurance is never too unaffordable, certainly not for the youth. Problem is, we are living in an age of instant gratification. We have developed a habit of beginning consumption of a product without even paying anything for it. Insurance, on the other hand, is a product which will give benefits in the future but regular investments have to start now. People have to understand that to get anything worthwhile in life, the sacrifices have to be made now.
If we want a better life for our future selves, we have to do certain things which may not be too gratifying today. The people who died at the tragic Balasore accident will leave very little for their families, in the form of Jan Suraksha money and government support. The lesson for us is that we have to make the right investment and risk management decisions today so that we can get a better future tomorrow.
The writer is an insurance industry analyst
RISK AWARENESS
- Indians need to look for more comprehensive insurance products that ensure better coverage
- When it comes to buying insurance, most people keep on delaying the purchase under one pretext or other