“It’s a matter of great concern that 80% of consumers acknowledge insurance’s pivotal role in financial security, yet a staggering 94% remain inadequately covered. This stark contrast between perception and reality drives our mission’s urgency,”Mahesh Kumar Sharma, MD & CEO, of SBI Life Insurance said
SBI Life Insurance, the largest life insurer in the country, unveiled the third edition of its comprehensive consumer study – ‘Financial Immunity Study (F.I.) 3.0’ titled “Demystifying the Consumer’s Illusions”.
The study delves deep into the minds of Indian consumers, unravelling the myths surrounding financial preparedness and revealing the common illusions that hinder their path to true financial security.
SBI Life commissioned the study in collaboration with knowledge partner- Deloitte, reaching out to 5,000 respondents across 41 cities covering the length and breadth of India.
Amidst a world reshaped by unforeseen challenges, the study unveils a stark reality that the Indian consumer’s perception of financial preparedness is often clouded by illusions that could have dire consequences leading them or their family members to have inadequate financial protection amidst life uncertainty.
While 68% consumers believe that they are adequately insured, only a meager 6% of insured consumers in fact have sufficient insurance coverage.
However, there is still a reason for hope, as a promising 71% of uninsured respondents believe that insurance is an absolute necessity to achieve ‘Financial Immunity’. Additionally, an overwhelming 83% of individuals who are insured recognize the critical nature of insurance in achieving financial resilience, reveals SBI Life’s Financial Immunity Study 3.0.
Mahesh Kumar Sharma, MD & CEO, of SBI Life Insurance said,“The findings underscore a critical need for a paradigm shift in how we perceive financial preparedness. It’s a matter of great concern that 80% of consumers acknowledge insurance’s pivotal role in financial security, yet a staggering 94% remain inadequately covered. This stark contrast between perception and reality drives our mission’s urgency.”
Soumya Dwibedi, Partner, Consulting, Deloitte India stated, “The findings reveal that a significant proportion of insurable consumers either lack insurance coverage or have inadequate protection, but living in an illusion of financial immunity highlighting a substantial gap between reality and perception.”.
Further, the highlight of the report is the revelation of five pervasive consumer illusions that have marred true financial preparedness; overcoming these misconceptions can illuminate the path to a financially immune future:
Illusion 1: “Merely owning an insurance policy guarantees adequate protection”
68% consumers are living in an illusion having sufficient insurance coverage but the matter of fact is that only 6% are sufficiently insured under their current insurance policies
In reality, 94% consumers are either underinsured or uninsured
Illusion 2: “Investments in financial instruments provide better security than insurance”
In reality, 80% consumers believe insurance is an absolute necessity for financial immunity & 71% of the uninsured consumers feel insurance is a critical lever in building financial immunity
Illusion 3: “Insurance policies can be forfeited in the event of fund shortage”
About 50% consumers revealed a tendency to prematurely surrender their policies
But in reality, insurance policies can act as collateral for loans in time of need
Illusion 4: “Owning assets and savings is a replacement for Life Insurance”
In reality, 62% consumers are not confident in their savings for the future
Traditional investments like fixed deposits and savings are favoured by Indian households, but they offer different advantages compared to insurance policies
Illusion 5: “Employer-provided insurance cover is sufficient”
96% of employees covered solely under their employer provided insurance are underinsured
In reality, employed provided insurance policies may not always be sufficient, depending on individuals growing needs