Reasons why we ignore Insurance in India
- “Ignorance is bliss”, till the time it’s not-
India culture is rich in a lot of things, but financial consciousness is not one of it. Children and young adults are educated in social do’s and don’ts, but not in matters of financial planning. All of us have seen examples around us when risk planning is discussed in the hind side.
But when life is running smooth, we believe this party is going to last forever and so we never plan for bad times.
Up till 30 or even more we believe that our health is abundant and here to stay forever, then we realize it’s not the case. Not until we see family ruined by passing of breadwinner that we put our responsibilities in perspective and plan for a term or life cover. But the sad truth is not every person gets that timely wakeup call, that firm nudge in the right direction. We spend only as much other are doing or less and all the while viewing insurance as an avoidable expense, not as the only dependable asset in the time of utmost need.
Another reason is lack of enough money, Insurance costs money and many people cannot afford to buy a sufficient cover, however, things are changing now, with a lot of insurance plans available online, people can choose what suits their need.
- Who is to blame?
Probably the chief culprit, in this case, is the messenger, all the disclaimer, all the talk and everything discussion portrays, discusses and advertises insurance as major financial decision by insurance carriers and agencies.
Over time this has changed, and insurance advertisement now carry a more personal message and life perspective for eg “Sar utha ke jiyo”, Zindigi ke sath be Zindigi ke baad be” etc
However, the traditional narrative has not totally been junked while selling because it still works. You have been made to feel that you can afford to buy insurance because you will save on taxes. And all buyers have been made concerned about salary deduction in the month of January, February and March. This is a very narrow perspective to make a financial security decision that can have life-altering impact if not done to a sufficient level.
Another guilty is the social narrative that still pedals the narrative of saving and security in hard cash, gold or other immovable assets, this is particularly true for the rural or semi-urban India. Since most cities see the large immigration flow in from villages the misinformation is still quite common in urban population set as well.
3. Too many similar:
This is a pain point for those who understand the need for insurance but still look at it primarily as a money-making investment option if not tax saving. These adaptors get caught up in the seller’s jargon of cover plus return narrative, hence, end up spending in a product that only partially addresses their financial security needs, all the while keeping them under an impression that they are sufficiently covered.
Since the insurance can be linked to many kinds of instruments and most times, they take precedence the buyer’s expectations or true needs are never fully addressed. Hence, it’s important for the buyers to educate themselves and take such mix instruments over and above the core Health or life/term plans. This delinking can only be made consciously by understanding that insurance is not an investment that one should see in light of return on investment (ROI).
Bringing it all together, insurance is a safe and reliable tool to manage unexpected financial loss during the course of life and in most cases, this is a substantial amount. However, looking at this as only a reoccurring expense or tool that can provide assured amount is diluting the purpose of insurance. hence, while making choices regarding your insurance or insurance-linked product your priority goal should be to secure sufficient risk cover and everything else can be an add on, otherwise, you run the risk of being left with only cream and no cake!
Susheel has been associated with insurance providers and intermediaries for about a decade or so. Worked as sales professional looking into direct B2B marketing, channel marketing, institutional and government contracts. He is also a certiﬁed Happiness Coach, Berkeley method of wellbeing California and wants to help companies have a better and happy workforce, his motivator to create Ethika.