Mumbai:
COVID-19 has highlighted the importance of life insurance and familiarity with term insurance along with endowment and unit linked plans has increased among Indians , said the latest Life Freedom Index(LFi) 2021 report of HDFC Life, released on Monday..
41% respondents have availed a life insurance policy post the first wave that enabled them to plan better for the second wave and the impact of COVID-19 is more severe across metros in comparison to Tier 1 and Tier 2 cities, said the report.
Almost 90% consumers have faced salary cuts or business losses to some extent, due to which the respondents are still concerned about COVID-19 while nuclear families have been the most impacted as joint families have been stable, possibly due to a better support system in the time of crisis.
According to the report,the top three concerns for the future – economic slowdown, job insecurity and fear of debt due to lack of income – are driving low confidence in terms of financial preparedness.
Financial awareness has increased during the last two waves. Consumers are looking to empower themselves with a better understanding of financial planning.Maintaining one’s standard of living under unexpected adverse events has been an important factor driving the need for financial security, explained the report.
The impact of COVID-19 on financial preparedness is more prominent amongst parents followed by the segment of women. This is largely driven by the feeling of insufficiency. Wisdom investors and young aspirants have seen the least impact. This is likely due to reasons such as maturity in investments and no dependents / lesser financial responsibilities, respectively.
Vishal Subharwal, head – marketing, digital business & E-commerce – HDFC Life said, “Life Freedom Index is our barometer for measuring the levels of financial awareness, the planning and the adequacy of the plan. Over the last few years we have seen changing trends. What makes the report different this time is the pandemic and its impact on consumer confidence.''
The drop in the index indicates that the health pandemic has turned into a financial concern with various challenges surfacing, he said..
The latest 2021 LFI study was conducted along with NielsenIQ across 14 cities (including Metros, Tier 1 and Tier 2) with 1987 respondents.