Close
Close

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.

  • Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Back

What Is The Life Insurance Penetration In India And How Does It Compare Globally?

Buy Life Insurance Now
  • 15th Mar 2021
  • 797
What Is The Life Insurance Penetration In India And How Does It Compare Globally?

Life insurance comes with many advantages. It offers different products types, such as term insurance, whole life insurance, unit-linked investment insurance, retirement based life annuity and endowment insurance, and more. There is a plan for every income group and budget, and the risk involved is quite low. However, despite these benefits, life penetration in the country has been rather low. This article talks about life penetration in India and how it compares to other countries.

What is life insurance penetration?

Life insurance penetration is a parameter to determine the ratio of premiums from life insurance plans to the gross domestic product (GDP) of the country. High life insurance penetration indicates the development of the insurance sector and reflects on the popularity of insurance products among the citizens.

What is the life insurance penetration ratio in India?

Unfortunately, life insurance penetration figures in India are quite low. If you consider the rate of insurance penetration in the country from the early 2000s, you will notice an increase. Life insurance penetration was recorded at 2.15% in 2001, which had substantially risen to 4.60% in 2009. However, after 2014, there has been a disappointing trend in the country. Insurance penetration in 2015 was recorded at only 2.72%. This marginally increased in 2017 with 2.76%. The financial year 2018-19 showed an upward graph with numbers reaching 3.70%. However, the overall picture still seems bleak.

What does global insurance penetration compare to India?

As per a report, the global penetration in 2019 was the highest at 19.97% in Taiwan. This was closely followed by Hong Kong that stood at 19.74%. The United States of America reported an insurance penetration rate of 11.43% while the United Kingdom stood at 10.3%. India’s neighbour, China, also recorded a higher life penetration at 4.3%. The world average was reported at 7.23%. These numbers are a lot higher than India’s insurance penetration.

Why is life insurance penetration in India so low?

Reasons that contribute to low insurance penetration numbers in the country:

1. Illiteracy:

A significant number of India’s population is not educated. As a result, a low financial acumen is a prime cause of low insurance purchases in the country. People still do not know about the benefits of insurance plans and how the different types of insurance policies can offer them relief in the case of financial emergencies.

2. Limited customer base:

Many insurance companies follow an agent-based model. The insurance agent finds clients, sells them an insurance policy, and in return earns a commission on every sale. This has led agents to pursue only a limited group of upper-middle-class or high-class Indians, completely ignoring other income groups, who in reality form the majority of the population.

3. Unstable economy:

With increasing unemployment, political unrest, and a widening gap between the rich and the poor, people have less disposable income in hand. This leaves them with very little to invest. The pandemic also added to people’s insecurities. In such circumstances, people are more occupied with sustaining in the present and have little interest and resources to safeguard their future financial needs.

What can be done to increase the insurance penetration rate?

An increased level of knowledge can encourage people to buy insurance. Many insurers like kotak life are now offering their plans online without the interference of agents. Insurance companies also post myth-busting blogs with accurate information on insurance products. This can enable people to compare different insurance products, check the claim settlement ratio of the insurer, and pick a suitable product without hassles.

- A Consumer Education Initiative series by Kotak Life

Tags

Also read

  • Why Renewal of Term Insurance Plan is Important

    Why Renewal of Term Insurance Plan is Important

    There is no amount of certainty in our lives. From childhood, we learn to protect our loved ones.

    Read more
  • Life Insurance for Overweight Applicants

    Life Insurance for Overweight Applicants

    If you are obese, you should consider buying life insurance. Your weight can impact your life insurance premium. Read here to know more about life ins...

    Read more

Related Plans

  • Kotak e-Term Plan - Online Term Insurance

    Kotak e-Term Plan - Online Term Insurance

    Kotak e-Term Plan is a pure term insurance plan that provides a holistic life protection at affordable prices. Find out the eligibility criteria, key ...

    Know more
  • Kotak Premier Life Plan

    Kotak Premier Life Plan

    Kotak Premier Life Plan is a limited premium paying participating whole life plan, where you can choose to receive bonus payouts even after premium pa...

    Know more
  • Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan

    All these years you have saved money to ensure a comfortable and financially independent life post retirement.

    Know more