THIRTY per cent respondent admitted that they do not have any idea about how much life insurance cover is required brings out the glaring protection gap among Indians. These are amongst many findings from 2018 Money Habits Survey published by Exide Life Insurance, revealing the perception of Indians on financial responsibility and prudence.
For Indians, life insurance is the most preferred financial instrument for planning major life goals. Life insurance is the top instrument for life goals such as building a house (43 per cent), children’s education (38 per cent), retirement (49 per cent) and legacy creation (50 per cent). When it comes to planning for a child’s marriage, they look at fixed deposits in addition to life insurance.
The digital survey covered respondents from 12 cities including metros and emerging Tier II cities. Exide Life Insurance launched it with an intention to understand how life insurance owners/intenders look at dealing with their money. Which financial instruments do they look while planning for key life goals? How well are they securing their families? How much life insurance cover do they currently have versus how much they think they should have?
The survey extends a 360-degree approach towards understanding the attitude of Indians on financial responsibility. Through the various subsections of the survey, it is made evident that Indians seldom cover the entirety of financial responsibility. 2018 Money Habits Survey brings to light that as an income earner of the family, Indians are inclined towards just earning, saving and to an extent investing for life goals.
Mohit Goel, director – marketing and direct channel, Exide Life Insurance, stated, “Financial Responsibility can be a complex concept to unpack, primarily because our ideas of what is financial responsibility are constantly evolving. The concept of financial responsibility also encapsulates the idea of protection through adequate life insurance cover. The Economic Survey 2018, states that the current life insurance penetration in India stands at less than three per cent in comparison to other developing countries. This also comes through in the findings of our 2018 Money Habits Survey, wherein individual insurance cover is still an uncertainty with 30 per cent of the surveyed Indians. Despite the thrust on financial literacy by the Government of India as well as Insurance Industry4, people still struggle to gauge the level of protection required for themselves and their family. 46 per cent of surveyed Indians feel that they should have at least 10 times their annual income but only 29 per cent of individuals have such cover.”
Today, the idea of financial responsibility has a multi-pronged approach encompassing earning, saving, record keeping and sharing relevant information with the family. Despite the fact that it is essential to maintain records of one’s financial dealings so that they are accessible in the time of need, nearly 38 per cent of surveyed Indians do not maintain them and 15 per cent feel it is not important to maintain a record. The survey revealed Indians do not realise how important it is for their family to know about the finances; with 37 per cent of surveyed Indians admitting that they have not kept their families informed about their financial dealings.
The survey findings also reveal that 55 per cent of the respondents maintain a physical diary with important information on their financial dealings; 38 per cent maintain an excel file; 15 per cent maintain this information on a mobile app. Sixty-six per cent of surveyed Indians maintain a physical copy of their life insurance policy bond, only eight per cent have linked their policies to an e-insurance account.
While Indians are busy earning, saving and building a legacy corpus, they are not looking at another important aspect of preparing wills, as 72 per cent of them have not prepared a will. This is happening despite being knowledgeable about the importance of a will. Surprisingly, even in the older age group of 45 and above, the penetration of Will is relatively low. The above insights suggest that awareness and execution in terms financial literacy is an area to be addressed with Indians even today.