Insurance awareness doesn’t stop at understanding the importance of insurance or the urgency to purchase it; knowing how much coverage is sufficient is also a key challenge that we, as insurers, aim to address

Vikas Mittal, Deputy CEO, Magma HDI General Insurance

In a country where literacy rates are on the rise, one would expect a corresponding increase in financial prudence, particularly regarding insurance.

However, a significant portion of the Indian population continues to overlook the urgency of securing adequate insurance coverage.

Misconceptions about the necessity and affordability of insurance persist, leading to procrastination and inadequate protection. It is crucial to dismiss common myths about insurance and underscore the importance of acting promptly to safeguard one’s financial future, regardless of age or current health status.

From Awareness to Action: Bridging the Gap
Insurance awareness is crucial for financial security, and because of the unfortunate COVID-19, there has been a substantial improvement in awareness.

However, the next critical step that many Indians overlook is the urgency to act on this awareness. This I-do-not-need-to-buy-insurance-now attitude is prevalent even among well-educated masses in India.

Despite understanding the importance of insurance, they tend to postpone purchasing a policy, often due to misconceptions about the costs or a belief that they can delay it without consequence.

This procrastination is a significant reason why insurance penetration rates remain low in India, even though literacy rates are rising. It’s essential to not
only be aware of insurance but also to recognize its immediate necessity to truly secure one’s financial future.

Additionally, insurance awareness doesn’t stop at understanding the importance of insurance or the urgency to purchase it; knowing how much coverage is sufficient is also a key challenge that we, as insurers, aim to address.

In today’s context, is ₹2 lakhs, ₹3 lakhs, or even ₹5 lakhs adequate?

Fortunately, there are innovative and cost-effective top-up options available in the market that can increase coverage without putting a dent on your pocket.

In many areas, having insurance is a legal requirement.

For example, in India you cannot get your car out on the road without having a third-party motor insurance. Despite this compulsion, around 50% vehicles in India are running without insurance. This could also be because of the misunderstanding about what insurance policies cover and what they don’t.

For example, if consumables are not covered in your health policy, the same will not get reimbursed.

It’s essential to educate people about the importance of insurance and ensure that they grasp the fundamentals of insurance policies, starting as early as sixth grade.

Top Misconceptions About Insurance: Debunking Common Myths
Misconceptions about insurance can lead to inadequate coverage and financial vulnerability. One common myth is that young and healthy people don’t require insurance.

However, life is unpredictable, and accidents or illnesses can strike anyone. Having insurance serves as a crucial safety net, providing financial protection when unexpected events occur.

Moreover, there’s a compelling reason to consider health insurance early in life. Premiums for health insurance tend to be lower for younger individuals. By securing coverage at a young age, you not only safeguard your health but also benefit from more
affordable rates.

Another myth is that insurance is prohibitively expensive, but there are many affordable policies to fit various budgets. Some companies like Magma HDI General Insurance provide plans at low prices.

Health Insurance premiums are also tax deductible.

Another common misconception regarding health insurance is that employer-provided coverage is sufficient. But adequacy of cover and what happens when one retires or when one starts her own business are important aspects to be considered.

One more common misconception is that everything is automatically covered by insurance policies.

However, this is not the case. For instance, a standard motor insurance policy does not cover damages resulting from normal wear and tear, nor does it include damages to tires or tubes (unless the damage occurs due to an accident). Similarly, a standard health insurance policy may not cover outpatient expenses.

To obtain additional coverage, individuals may need to opt for add-ons or pay additional
premiums.

There’s also a misconception that claims frequently result in unfair rejections; whereas many rejections occur due to incorrect information provided or non-compliance with policy terms.

By dispelling these myths, one can make informed decisions and secure the coverage they need.