There is a growing level of willingness to buy insurance, especially in tier 2 and 3 cities of India, finds an online survey by insurance marketplace Policybazaar. The study surveyed 5,000 consumers to understand the behavioural shift in insurance buying trends.
At 89 per cent, tier 2 cities had the highest number of respondents who said they wanted to renew their health cover. In comparison, it was 77 per cent participants from tier-1.
Similar trends were observed in term insurance, where 59 per cent of respondents who want to increase their coverage belong to tier-3 cities, as compared to 26 per cent from tier-1 cities.
The survey results point towards the sense of urgency spurred by the pandemic with respect to insurance awareness across the country. Sarbvir Singh, Policybazaar.com CEO, said, “The pandemic has made people realise the need for continued investment in a robust financial safety net for themselves and their loved ones. It is even more promising to witness this awareness gradually reaching the length and breadth of the country. Technology can be accredited for bringing about this change and driving it forward by making insurance more personalised and accessible.”
Distinct Rise In Health Insurance
Of the respondents who had contracted Covid, 25 per cent were hospitalized. About 18 per cent of them spent over Rs 15 lakh on treatment, and 22 per cent were not adequately covered by their existing policy. As many as 13 per cent of the participants who contracted Covid did not have health insurance. These figures clearly indicate that one should opt for at least Rs 15-20 lakh coverage for each family member.
The study also found that as many as 62 per cent of the total respondents had an active policy and didn’t depend just on, say, corporate cover. That Covid was a catalyst id reflected in the fact that 50 per cent of these policies were bought after Covid’s first wave and 41 per cent after the Delta wave. In addition, 80 per cent of these policies were family floater plans, thereby revealing a higher inclination towards ensuring sufficient coverage for the entire family.
A significant proportion of 84 per cent of respondents did not have to serve a cooling-off period. Earlier, a cooling-off period of 3-6 months was applicable, and people recovering from Covid could not buy a policy before completing this duration.
Even as Covid infections are lower than earlier, over 80 per cent respondents said they would renew their health insurance; 35 per cent, in fact, plan to increase their cover. Rising medical inflation, financial instability and covering more family members were given as the main reasons for renewal or increase.
Term Insurance Gets Bigger
Many respondents said they want to opt for larger cover to ensure the protection of their dependents. As of April 2022, 60 per cent respondents had an active term insurance policy. While 55 per cent said they prefer term insurance as they want a larger cover for a lower premium, 24 per cent said they wanted enhanced protection over and above their existing life insurance policy. This depicts an increased awareness towards benefits of a higher cover policy among the buyers.
The purchase trends in term plans are very similar to those in health insurance. While 47 per cent of the active term policies were bought after the first wave, 40 per cent were purchased after the second wave. While the pandemic might have triggered many of the purchases, 78 per cent respondents said they want to continue the policy. Almost 39 per cent said they want to opt for a higher cover. The highest number of these respondents (59 per cent) were from tier-3 cities.
Need For Financial Security
As many as half the respondents (50 per cent) said they were impacted financially by Covid. Even after two years of the pandemic, out of these respondents, only 25 per cent said they have recover to the pre-pandemic levels, while the rest are still earning a lower income or looking for jobs. This further establishes the need for robust financial security to battle uncertainties.
