Life insurance is the most preferred investment instrument to achieve financial goals for almost two-thirds (70 per cent) of millennials closely followed by mutual funds (69 per cent) and fixed/recurring deposits (64 per cent), according to a recent survey jointly conducted by ASSOCHAM and IndiaFirst Life Insurance.
“Higher cover at lower premium rates, simplified buying process aided with quick customer service and easy documentation makes life insurance a preferred financial asset,” highlighted the survey report titled, ‘Household savings and simplification of insurance,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) jointly with IndiaFirst Life Insurance.
ASSOCHAM and IndiaFirst Life Insurance had conducted a survey over a span of two weeks during July-August 2018 to study savings and investment patterns of about 1,000 individuals in the age group of 18-35 years across Maharashtra.
The survey noted that respondents are quite cognizant about insurance as a financial instrument and are aware about the distinct types of insurance products with 35 per cent respondents preferring to invest in a term plan.
About 80 per cent respondents said they expect to have additional features in their policy along with life cover. Of these, 35 per cent showed preference for product offering life cover and returns the premium at the end of policy term and 21 per cent would like to have an add-on feature of regular money-back, in addition to assurance of a life cover.
While nearly 60 per cent respondents have at least one life insurance policy and another eight per cent are planning to purchase one in the coming year, only seven per cent do not consider insurance as a potential savings option.
However, 27 per cent of those who took survey do not have an insurance policy and have no plans to purchase it within a year, thus it is imperative to make people aware about benefits of insurance.
Interestingly, 63 per cent respondents are earning but about 60 per cent save less than 10 per cent of their income. “This is a disturbing trend as such a narrow overview of the future can turn out to be a vast problem at later phases.”
It also highlighted that only 20 per cent respondents do a recurring investment while 42 per cent make a single investment based on the savings available and three per cent invest haphazardly without following any fixed pattern.
The study thus suggested insurance companies to come up with simple and easy to enrol plans to take care of such investment pattern. “The industry should try to launch new products offering flexibility of premium payment.”
Noting that long-term products are corner stone of insurance industry, the study said there is a need to look for ways to bring out options whereby people can add up premiums to their policy whenever they have surplus funds and their policy benefits get increased accordingly.
It also recommended running digital and print media campaigns emphasizing importance of insurance and the need to introduce simple and easy-to-understand products with hassle-free processes for common man to follow.