May 5: The global life insurance industry has seen significant changes over the last few years. With the pandemic taking centre stage, basic needs like lifeinsurance have gained a newfound importance in the consumer’s life. As per recent reports, while globally the industry has witnessed a slump in the life sector, not surprisingly, the same sector saw a growth of 10% in India. This reiterates the fact that there is a rapidly increasing awareness around this essential life practice for financial securityand more education led conversations around the types of policies and benefits available are imperative.
Another interesting point to note is that global economic and demographic trends suggest that the middle class is rapidly moving towards bringing in higher incomes along with heightened risks to manage. According to reports, by 2030, all baby boomers will be touching the age of 65 years or above and are expected to outlive their retirement savings. Thus, this data also points towards the one thing which should be a key focus area for people at this moment – Financial Security. Which means that there is likely to be a greater willingness and acceptance towards life insurance policies and people are also starting to look at them as a safe, investment driven financial product.
But are Life Insurance solutions better than other financial products?
Life insurance is a “risk eliminator” and an effective savings instrument. Having a LI policy is like having a timely aid. It ensures financial support in an unfortunate event of demise of the main earning member of the family.
LI allows savings to occur which is the most important reason as each and every individual looks out for his or her family’s savings. This policy comes in the form of a long-term saving where the breadwinner is able to make payments in the form of easy instalments.
A life insurance policy is also accepted as security against which an individual can ask for a loan. While People might have different reasons for buying life insurance policy, the ability to save taxes is another benefit that can be availed if an individual has a LI policy. As per Life Insurance Council’s baseline survey, about 21% practice this when it comes to having financial security. Apart from this, LI also acts a financial corpus in times of a family’s personal needs like financing children’s education, marriage etc. About 59% believe this to be their biggest reason for buying life insurance, as per LIC survey.
While other financial instruments are equally important for an investor’s portfolio depending upon the savings and expenditures, life insurance should be included in every financial investor’s portfolio because it is a need and not a choice. Keeping one’s budget aside, people must make sure that their life is insured and that they leave behind ample financial coverage for their family in times of unfortunate events. This is especially true if an individual is the sole bread winner in his or her family.
Having said that, the life insurance industry does face a pivotal opportunity and a chance to fulfil the growing customer needs while also returning to profitability and growth at the same time. But there are certain gaps that need to be catered for before we expect life insurance companies to outperform. This includes aspects likepersonalized customer experiences, flexible product development suitable for a challenging regulatory and interest-rate environment, reinvention of newer skills and capabilities and technological advancements. If these factors are taken into consideration, the LI industry can flourish and become limitless.
With technology playing a key role now, the availability of data has been soaring high. Insurance companies have made a lot of progress in technologies like artificial intelligence and advanced analytics. Insurers are putting their time and energy towards areas like bettering their service quality services. Creating a transparent relationship and providing personalized experiences have become key responsibilities in the current scenario. Customers can easily file claims and access their respective agents, insurance quotes and policy information with a few taps on their mobile screens.
Now more than ever, companies are getting increasingly dependent on technology to drive effectiveness and efficiency, improve cybersecurity and expand capabilities across the organization. Having said that, there is a nationwide need to understand Life Insurance and its benefits. It is time to break the decades old misconception of Life Insurance being a long-term investment and start utilizing modern technology to benefit the consumers.
