EMBEDDED VALUE: Life insurance industry needs to look at its business in a different way

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June 23, 2021 2:15 AM

A few unfortunate children run the risk of losing either or both parents due to accident or disease, leaving them helpless and at the mercy of others.

During childhood one needs parents’ emotional and financial support. Later, one earns and deploys all resources to make the spouse and the new family members get the best in life.

A successful individual is one who takes cognizance of the probable events and associated risks during his life and plans for mitigating such risks, avoidable as well as unavoidable, through a planned handling of such scenarios. The universally accepted principle is that a responsible citizen takes care of himself as well as of his family’s future in all probable circumstances through systematic financial planning so that everybody’s dreams regarding quality of life are realised, irrespective of the intensity of adversity if any.

A few unfortunate children run the risk of losing either or both parents due to accident or disease, leaving them helpless and at the mercy of others. Adolescents face the risk of losing support when they are about to start a career or their married life. Similarly, a family may lose its custodian at the middle of life and face serious financial crisis as well as dislocations upsetting all the aspirations and activities of the family members.

Insurance provides security
During such a vulnerable life journey the only scientific tool to provide security is insurance. People must be trained to adopt such tools not only once but at every stage of life as insurance steps in when one needs financial security the most. During childhood one needs parents’ emotional and financial support. Later, one earns and deploys all resources to make the spouse and the new family members get the best in life.

Such an indisputable interdependence calls for mandatory risk management by the family. One does not require life insurance because he is ‘going to die’ but because those whom he loves are going to live. This is the only instrument to ensure that one leaves behind adequate wealth for one’s dependents even if he doesn’t possess any such “wealth” during lifetime. This concept of life insurance needs to be understood by one and all, but unfortunately the method of marketing life insurance during all these years has made the product widely repugnant. Even as the market now boasts digital offerings, the ground reality is that insurance continues to be a push product.

Insurers need to innovate
With so much transformation happening in the marketing area some kind of urgency must be felt by the insurers and the regulator. They need to look at their business differently. Life insurance is a business of social as well as of moral responsibility. People need to be educated about the indispensability of insurance.

Omnichannel approach and a very close relationship with the market is what the insurers need to adopt for providing every insurable person a suitable policy and various opportunities to review the client’s changing requirements. Insurers need to partner with the customers and ensure that all of their requirements are met at different stages of life. Insurers operating within any market cannot afford to forget that they are collectively responsible to secure every child and every family within the area they are licensed to operate.

Though the insurance industry is growing its business every year, insurance penetration has remained unchanged year after year. Since every family is not adequately covered by insurance, the unfortunate spouses and children have been facing uncertainties and a dark future; such cases being in plenty around us today. The current crisis must revitalise the life insurance industry to rewrite its vision and mission.

The writer is former MD & CEO, SUD Life

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