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Covid-19 continues to make urban India feel financially insecure: Max Life survey

Urban India has grown more anxious about financial security and preparedness in the last one year, and there is a significant shift towards increasing savings and investments. Financial anxieties related to covid-19 and the ability of current earnings to cover expenses have emerged as top concerns for urban Indians.

These are the key findings of the third edition of the Max Life India Protection Quotient 3.0 (IPQ 3.0) survey done by Max Life Insurance Co. Ltd in partnership with Kantar. As per the survey, Urban India witnessed a positive movement of four points on the Protection Quotient scale from 35 (IPQ 2.0) to 39 at present.

Also Read | What 2020 did to India’s inequality

India Protection Quotient measures the degree to which Indians feel protected from future uncertainties. The quotient, on a scale of 0 to 100, is based on the attitudes, mental preparedness around future uncertainties, awareness, and ownership of life insurance product categories (term, endowment and Ulip). Around 4,357 respondents were surveyed via face-to-face interviews during November-December across 25 cities — six metros, nine tier I and 10 tier II cities.

The survey revealed that urban India’s anxiety levels climbed up from 55% to 61% this year. While 64% respondents felt secure about taking care of regular medical expenses as per IPQ 2.0, only 59% felt secure as per IPQ 3.0.

In terms of the global perspective, India continues to significantly lag developed countries. “There are other markers with which you can compare. The biggest one is penetration and one way to measure that is to look at the life insurance premiums as a percentage of the GDP, and India is still in the range of 2-3%, whereas some of the developed countries may rank as high as 8-9%. We have a lot of ground to cover, but this provides us with a big opportunity to drive insurance business,” Prashant Tripathy, managing director and chief executive officer, Max Life, told Mint.

The survey revealed that the degree to which Indians are aware of life insurance products or the Knowledge Index moved up by nine points to 55 and the Life Insurance Ownership levels increased by 500 bps from IPQ2.0 to 71%. However, the Security Level dipped by 300 bps to 57% amidst uncertain times.

The Knowledge Index is derived from awareness across life insurance product categories, while the ownership level is based on the ownership of various financial instruments. The Security Level captures consumers’ attitudes towards various financial facets.

In the wake of the pandemic, the survey witnessed an increase in India’s levels of term insurance awareness and term insurance ownership. Now, 32% of urban Indians own term products, higher than the 28% as per IPQ 2.0.

IPQ 3.0 also revealed that millennials warmed up to the life insurance during covid-19 with a 6% jump in ownership to now 70% from 64% earlier in IPQ 2.0.

“Millennial market is growing every year and the non-millennial market is shrinking. Millennials have a bias towards buying more protection and buying products that are simple, available digitally and are easily compared. Life insurance companies will have to adjust accordingly and put these features at the front,” Tripathy said.

The survey also showed that urban India’s savings and investments increased during the pandemic, while basic and luxury expenses went down significantly.

“Savings and investments increased from 41% (IPQ 2.0) to 50%, whereas basic expenses decreased from 44% (IPQ 2.0) to 41%. Savings objectives also saw some change during the pandemic,” Max Life said in a release.

Working women also came at par with men in the Protection Index. “While the protection quotient for men was at 40 points, working women demonstrated a strong IPQ of 39 in the backdrop of the pandemic. Despite 69% working women owning life insurance as opposed to 73% men, the former was found to be more attitudinally secure during covid-19,” the survey results showed.

“In the wake of the covid-19 pandemic, IPQ 3.0 presents us with useful insights around people’s attitudes towards savings, investments, and the overall idea of financial protection in uncertain times,” said Soumya Mohanty, managing director and Chief Client Officer, Kantar Insights, South Asia.

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