India Protection Quotient moves up by 4 points to 39 on the back of heightened awareness and ownership, however COVID-19 Pandemic continues to make Urban India feel insecure; reveals Max Life’s India Protection Quotient 3.0

New Delhi: Reinforcing its commitment towards ensuring greater financial protection for the country, Max Life Insurance Company Ltd. (“Max Life”/ “Company”) today unveiled the findings of the third edition of its flagship survey ‘Max Life India Protection Quotient 3.0 (“IPQ 3.0”)’ in partnership with KANTAR. As per the survey, Urban India witnessed a positive movement of 4 points on the Protection Quotient scale from 35 (as per IPQ 2.0) to 39 (as per IPQ 3.0). However, it was found that in the backdrop of COVID-19, India continues to feel financially insecure. 

Conducted in the most uncertain and challenging times, Max Life IPQ 3.0 assesses the notable shifts in attitude of Urban Indians from the beginning of the lockdown in March 2020, through the different phases of COVID-19, until announcement of viable COVID-19 vaccine in December 2020. Around 4,357 respondents were surveyed via face-to-face interviews with adequate safety measures across 25 cities comprising of 6 metros, 9 Tier I and 10 Tier II cities, making this one of the most comprehensive financial studies carried out during COVID-19 situation. 

Urban India has grown more anxious about financial security and preparedness in the last one year, the survey noted, and there is a significant shift towards increasing savings and investments. Financial anxieties related to COVID-19, and ability of current earnings to cover expenses have emerged as top concerns for Urban Indians.

The survey revealed that the degree to which Indians are aware about life insurance products or the Knowledge Index moved up by 9 points to 55 and Life Insurance Ownership levels increased by 500 bps from IPQ 2.0 to 71%. The degree to which Indians feel financially secure and prepared or the Security Level dipped by 300 bps to 57% amidst uncertain times. Notably, the survey shows a significant growth of Knowledge Index across all cities, age and gender, highlighting responsible outlook of Urban India amidst uncertain times.  In the wake of the pandemic, the survey witnessed an increase in India’s levels of Term insurance awareness and Term insurance ownership. Now, 28% of Urban Indians own Term products, notably higher than the earlier 24% as per IPQ 2.0.

Commenting on the launch of IPQ 3.0 Survey, Prashant Tripathy, Managing Director and CEO, Max Life Insurance said, “The idea behind India Protection Quotient, when launched three years ago, was to make Indians more aware about the benefits of financial protection in the contemporary world. Over the course of time, IPQ has come to be recognized as a valuable property, instrumental in helping consumers and the life insurance sector at large to understand the financial preparedness of Urban Indians. And, while the survey has observed a positive trend in Urban India’s approach to financial protection over the last three editions, there’s still a long way to go.” 

He further added, “Launched in the backdrop of an unprecedented year, IPQ 3.0 survey reveals that while issues surrounding financial preparedness were magnified during the challenging COVID-19 times, there are long-term lessons to be learned when it comes to addressing and acknowledging financial protection. Slowly but gradually, we are seeing Urban India move towards proactive financial planning that can avert anxieties and help build resilience.”

Soumya Mohanty, Managing Director and CCO, Kantar Insights, South Asia remarked on the findings of the survey, “IPQ as a flagship survey has grown to become a strong marker for the life insurance sector in India. Since its first edition in 2019, it has helped the sector sharpen their focus and product offerings. In the wake of COVID-19 pandemic, IPQ 3.0 presents us with useful insights around people’s attitudes towards savings, investments, and the overall idea of financial protection in uncertain times. We’re happy to be associating with Max Life Insurance as it strives to make a difference in helping Indians understand the importance of life insurance and deepen its penetration throughout the country in the year following COVID-19.”

The following findings reveal insights that highlight India’s shift across financial priorities and anxieties, compared from pre-COVID times:

ZONAL AND CITY-WISE INSIGHTS

• Amongst zones, South India continues to be most protected with Protection Quotient at 41

South India continued to outperform other regions, followed by North with IPQ of 39, West with IPQ of 38 and East with IPQ of 36. While East India’s Protection Quotient and Knowledge Index lagged in comparison to other zones, it led in Life Insurance Ownership with 76%. Security levels remained highest in South at 65%, followed by North at 61%, West at 54% and East at 45%. 

• Urban India’s metros continue to be most protected; Delhi leads with Protection Quotient at 50 amongst metros

With a Protection Quotient of 43, metros continued to feel most financially protected during COVID-19. This was followed by Tier 1 cities which demonstrated a Protection Quotient of 38 and Tier 2 cities at 33. Tier 1 cities witnessed sharp rise in life insurance awareness, from 46 to 54, as well as ownership that now stands at 66% compared to 62% previously.  It has been noted that security levels have dropped all across in comparison to IPQ 2.0, although metros continued to have a higher security level of 62% in comparison to Tier 1 cities at 61% & Tier 2 cities at 46%. 

Additionally, most major cities marked an increase in Protection Quotient – Delhi led with a Protection Quotient of 50 raking a 3-point increase in comparison to IPQ 2.0. Hyderabad was the only metro city to witness a decline from last year as Protection Quotient dropped by a point to 45. The survey also reported an increase in Knowledge Index and a dip in security levels across all cities. 

URBAN INDIA’S ANXIETIES AND OUTLOOK TOWARDS FINANCIAL PROTECTION

• Urban India increases savings and investments, basic and luxury expenses go down significantly 

IPQ 3.0 brought to light that in comparison to pre COVID-19 times in IPQ 2.0, Urban Indians are prioritizing savings and investments over discretionary spending. Savings and investments increased from 41% (IPQ 2.0) to 50%, whereas basic expenses decreased from 44% (IPQ 2.0) to 41%. Savings objectives also saw some change during the pandemic. While only 35% saved for death of breadwinner, a higher 41% saved for it now and 62% saved for old age security, as compared to 57% earlier. 

• Anxiety levels up by 6%; fear of infection, cost of COVID-19 treatment, untimely death of breadwinner; topmost anxieties

The survey revealed that Urban India’s anxiety levels climbed up from 55% to 61% this year. While 64% respondents felt secure about taking care of regular medical expenses as per IPQ 2.0, only 59% felt secure as per IPQ 3.0. Urban Indians were found to be most anxious about the possibility of ‘someone in the family getting infected with COVID-19’. ‘Sustaining lifestyle and expenses with current earnings’, ‘financial security in case of breadwinner’s death’ and ‘cost of COVID-19 treatment’ were the other three topmost anxieties.

• Pandemic compelled Urban Indians to be more proactive about their health, fitness, financial planning 

With a sense of increasing worries and reducing security, IPQ 3.0 saw Urban Indians becoming more proactive about financial planning and overall health and fitness. 69% respondents said that they’re proactive about financial planning and they believe in saving more than spending respectively. 

AWARENESS OF TERM INSURANCE

• COVID-19 drives Indians to purchase Term Insurance plans; awareness of Term Insurance highest in Tier 1 cities

The survey also indicated that Urban India is increasingly waking up to the challenges of pandemic and realizing need for greater financial protection. Urban India saw a sharp increase in Term Insurance awareness by 7%, however penetration still remained low at 28%. While 42% respondents said they’d purchase Term insurance to ‘protect family in case of breadwinner’s death’, 33% respondents said that they would purchase Term insurance plans because ‘death is a reality one needs to be prepared for’. The survey also observed that awareness of Tier 1 cities of term insurance stands at 65%, highest across India. Amongst zones, South India has best Term insurance ownership at 33%. The sharpest increase of 12% in Term awareness was seen in North and West India. 

• Over half of Urban India feels Term plan cover is insufficient; premium no longer the only influencer while purchasing Term insurance plans as they prioritize sum assured/cover 

On the back of improved Term awareness, 59% Urban Indians feel that their Term plan cover is insufficient to safeguard the future of their family. The survey also revealed increasing importance of cover, as 69% of Urban Indians now consider it to be an important product parameter when buying Term insurance, as opposed to 63% in IPQ 2.0. 

• Realization of Critical Illness, death occurrence in family sees significant increase in COVID times

25% respondents, as opposed to earlier 19% respondents (IPQ 2.0), thought about critical illness preying on them whereas 30% had the thought that it could prey on their family members. In comparison to 18% as per IPQ 2.0, a higher 25% had the realization of death and thought about the financial stability of the family in case of untimely death of the breadwinner.  

As a result, critical illness rider witnessed an uptake. 26% respondents i.e. 1 out 4 bought a critical illness rider with their Term insurance policy as per IPQ 3.0. The same marks a significant rise in rider adoption compared to IPQ 2.0 where only 11% or 1 in 10 Indians brought a critical illness rider on their life insurance.  

MILLENNIALS & NON MILLENNIALS 

• Millennials warm up to life insurance during COVID-19 with a 6% jump in ownership

In the backdrop of COVID-19, millennials demonstrated a 6% jump in Life Insurance Ownership – from earlier IPQ 2.0 64% to now 70%. While non-millennials lead with 73% Life Insurance Ownership, Knowledge Index, Protection Index and overall Security Levels of both cohorts are almost at par in the backdrop of COVID-19. 57% millennials as opposed to 58% non-millennials feel financially secure under current circumstances, indicating a more or less similar impact of the pandemic. 

WOMEN & MEN

• Working women at par with men in Protection Index; attitudinally feels more secure during COVID-19 

While the protection quotient for men was at 40 point, working women demonstrated a strong IPQ of 39 in backdrop of the pandemic. Despite 69% working women owning life insurance as opposed to 73% men, the former was found to be more attitudinally secure during COVID-19. While 59% working women were financially secure, only 57% men were found to be secure. Furthermore, working women’s Term insurance awareness was also at a higher 64 point as compared to men who displayed lesser Term insurance awareness at 62 points. 

THE DIGITALLY SAVVY URBAN INDIAN