In March 2017, the Association of Mutual Funds of India (AMFI) launched the “Mutual Funds Sahi Hai” campaign, which has seen tremendous success with an increasing number of people investing in mutual funds. Inspired by this success, the insurance industry has launched a similar initiative called “Sabse Pehle Life Insurance” aiming to boost life insurance penetration in India. Last week, the Life Insurance Council announced this campaign to enhance awareness and help people understand the importance of life insurance.
Despite efforts, insurance penetration in India remains among the lowest globally, at 3.69% according to the FY18 annual report by the Insurance Regulatory and Development Authority of India (IRDAI). From FY15 to FY17, life insurance penetration was stagnant at 2.7%. One major reason for this low penetration is the complex nature of insurance products, which often come with numerous terms and conditions.
V. Manickam, secretary of the Life Insurance Council, emphasized that the slogan “Sabse Pehle Life Insurance” resonates with Indian cultural values, where elders prioritize essential needs. The campaign will utilize a mix of advertising, media coverage, on-ground activities, and digital and social media initiatives to ensure extensive reach. To enhance visibility, the slogan will be presented in major Indian languages such as Tamil, Telugu, Kannada, Malayalam, and Bengali.
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The council recognizes the need to increase awareness about life insurance. Rakesh Goyal, director of Probus Insurance, highlighted the necessity of educating people on why having a life insurance policy is crucial. Life insurance is the only way to ensure financial security for your family in case of an unforeseen event. Goyal also pointed out the need for simpler policy wordings and a more straightforward purchase process.
Goyal stressed the importance of promoting term plans in the same way motor insurance is promoted. With the amendments to the Motor Vehicles Act, lacking motor insurance can result in hefty penalties. A term plan offers pure life coverage for a specific period and is the most affordable type of life insurance since it does not serve as an investment product. If the policyholder dies during the term, the nominee receives the death benefit.
Also read: Union Budget’s Digital Transformation in Life Insurance: Impact on Policyholders
The rising healthcare costs have increased awareness about health insurance, but life insurance still does not receive the attention it deserves. One major issue is that people often view life insurance solely as a tax-saving tool rather than a protection plan. Vishal Dhawan, a certified financial planner and founder of Plan Ahead Wealth Advisors, noted that another reason for low life insurance penetration is the reluctance to invest in long-term plans.
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The “Sabse Pehle Life Insurance” campaign provides an opportunity to distinguish between pure protection products and protection-cum-investment products. Dhawan suggests that the council should promote simple documents that clearly outline benefits and risks, similar to credit card terms and conditions. Pushing for life insurance as a pure protection plan is a positive first step.
With 24 insurance companies offering life insurance products, availability is not the issue—lack of awareness is. Dhawan mentioned that low financial literacy about the benefits of protection-focused insurance plans and lengthy paperwork are significant barriers.
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