Max life Insurance in partnership with KANTAR, a research company, has released the Indian Protection Quotient (IPQ) survey which shows how prepared urban Indians are to face financial uncertainties. As per the report, Urban India scores 37 on the scale of 0 to 100 and feels that they are underprepared to face the financial uncertainties.
IPQ is a composite index which is prepared on the basis of various factors such as attitudes, mental preparedness around future uncertainties, awareness and ownership of life insurance product categories of the people surveyed.
The IPQ score has seen an improvement of 2 points from last year. This year was the second addition of the survey.
Speaking about the improvement on the IPQ Prashant Tripathy, Managing Director & CEO, Max Life Insurance said, “The survey witnessed a gradual but notable increase in IPQ over the last 12 months. With a movement of 2 points on the Protection Quotient scale from 35 to 37, it indicated that Indians are feeling slightly more protected.We have witnessed substantial increase in both awareness and ownership of life insurance and could be the reason for improvement in IPQ."
The survey also revealed that the awareness and ownership of term plans has improved over the last 12 months.
As per the survey, the knowledge index that measures the level of awareness about the life insurance products has increased by 9 points to 48. Across the other insurance products including endowment plan and unit linked insurance plans (ULIPs), term plans saw highest rise in awareness by 1000 basis points (100 basis points is equal to one per cent) to 57% over the past 12 months as per the report. The ownership of term plans increased by 700 basis points to 28%.
Talking about how the IPQ can be improved further Tripathy said, “Awareness and ownership are two key drivers of protection quotient and would always precede the increase in IPQ, which is composite index. There has been a significant improvement of 9 points in awareness index and 500 bps increase in life insurance ownership which is very encouraging. At the same time there has been an increase in anxiety about the financial future and I view it as a positive development because anxiety will drive people to action which in turn will result in better financial planning and protection."
The survey further revealed that although term plans saw highest increase in awareness, endowment plans continue to lead with an ownership at 30%.
The report further revealed that the millennials have grown more anxious about financial security with their top anxieties being, day to day medical expenses and sustaining lifestyle and expenses with the current earnings. “When compared, women remained more anxious about financial security than men across several parameters. The survey also revealed that Tier II cities focus more on savings than protection and demonstrated a preference of endowment policies over term insurance," said the report.
The survey is based on the responses of 7,014 people across 25 cities comprising of 6 metros, 9 Tier 1 and 10 Tier 2 cities.