Home Economy Indians not secured against contingencies: Survey

Indians not secured against contingencies: Survey

By IANS

Kolkata : A whopping 75 percent of Indian households said they would be unable to easily sustain their current lifestyle beyond six months in the event of disability due to an accident, illness or unemployment of the principal bread-earner.

SBI Life Insurance unveiled the findings on the behaviour and expectations in the country, with regard to acquiring and planning credit, at a press conference here Tuesday.

The research titled ‘Protecting Financial Commitments: Behaviour and Expectation’ was jointly conducted by SBI Life and its joint venture partner Cardif, a global leader in credit protection products.

Conducted across 18 countries, the research reveals three main phenomena: people share feelings of vulnerability towards “life contingencies”, have appetite for credit consumption, and the need for protection.

Speaking on the findings of the survey, U.S. Roy, Managing Director and CEO, SBI Life, said, “The research initiative is a reflection of our customer centric focus to understand customers’ expectations and develop relevant solutions that best meet their needs.”

He said given the low penetration, as revealed in the survey, there is a huge potential for creditor insurance in India.

Creditor Insurance covers the payment of monthly instalments that the borrower is justifiably unable to pay in the event of unforeseen circumstance impacting his steady source of income. It is normally bought for mortgage, car purchase, household appliance purchase etc, at a rate ranging from 5 to 10 percent of the loan’s equal monthly instalments.

The survey also highlights the diversity in attitudes and behaviour towards credit and credit protection across all the metros.

“We believe this research will help our partners and many other financial institutions get closer to the consumer and understand the underlying social phenomenon that impacts business,” he said.

One of the major findings has been that the financial vulnerability in India towards life contingencies is the highest.

Although 98 percent of the Indians acknowledged the need for creditor insurance, only 8 percent of the Indian population is aware of such insurance (against 43 percent global average). And only 12 percent of those who are aware have purchased creditor insurance, which is a miniscule 1 percent of the total Indian population.

First to launch credit protection products in India in September 2002, SBI Life currently has partnership with several financial institutions for such products, ranging from home loans, tractor, auto and two-wheeler purchase to consumer durables and credit cards.

During fiscal 2006-07, home loan protection products alone contributed to more than Rs.2.25 billion of new business premium income.