Life insurance cover for all

FOR A COUNTRY like India, where state support following untimely death is negligible, unlike many developed nations, adequate life insurance cover is an absolute necessity to provide necessary security cover for the family of the deceased.

- AKHIL GUPTA

The critical need is for high life cover for individuals i.e., policies that provide substantial payment to the next of kin in the event of an individual's death. This is achieved through "Protection" or"Term Life Insurance" which can offer a cover of 500 to 800 times or more the annual premium paid, depending on the insured's age and health, for a specified period, say till the age of 65 or 70 provided premium is paid annually (even if the policy holder develops a disease later on). For instance, a healthy 30year-old can obtain a pure protection policy with a premium of less than ₹1,000 per month for coverage of ₹1 crore.

Despite this pressing need, India remains among the most underinsured countries globally. These facts highlight this starkly:

Total sum assured, i.e., life protection as percentage of GDP in India is 24% versus 332% in Singapore, about 250% in the USAand Japan and significantly higher in several Asian nations (153% in Malaysia, 143% in Thailand and 127% in South Korea (Source: Mckinsey).

Protection gap i.e., the shortfall in total protection required, is highest in India at 83% whereas it's 55% in Singapore, South Korea, and Australia and 61% in Japan (Source: Swiss Re).