According to a, 41% respondents said they would purchase term insurance plans because it is important to have some financial protection in the wake of the spread of Covid-19.
Covid-19 has turned out to be a key trigger for purchase of term insurance, according to a survey. It suggests that investors are attracted towards term plans to ensure financial protection in case of untimely death of the earning member of the family.
The survey, Max Life India Protection Quotient-Express’ (IPQ Express), which has been conducted by Max Life Insurance in association with KANTAR, had a total sample size of 1,864 respondents across six metros, nine Tier 1 cities and 10 Tier 2 cities.
According to the survey, 41% respondents said they would purchase term insurance plans because it is important to have some financial protection in the wake of the spread of Covid-19. Around 37% said they would buy term insurance because life is uncertain and anything can happen anytime.
Term plans are pure protection plans offered by insurance companies, and are the simplest among life insurance categories. In term plans, the family of the insured gets a fixed amount only on death. There is no maturity benefit if policyholders survive the policy term.
According to the market participants, only 4-5% of new business premiums come from term plans.
One of the key reasons term plans were not very popular earlier was the absence of monetary benefit after the plan’s expiry in cases of survival. However, with more awareness about the product and several insurers starting to offer term plans with return of premiums, they are now attracting investors.
The IPQ Express survey also revealed despite the current situation of Covid-19, there exist few notable barriers in the way of term plan adoption. While perceived high premium is a key barrier for 28% respondents, 20% feels it is difficult to settle a claim and therefore remain averse to buying term plans.
The fear of pandemic has also led to investors buying critical illness riders along with life insurance policies. “When confronted by the thought that Covid-19 could prey on the individual or family, 31% respondents in metros and 20% in Tier 1 cities said they bought a life insurance with Covid-19 or critical illness rider,” the survey shows.