76 percent Indians live without insurance cover: survey


Lucknow : Nearly 76 percent Indians live without an insurance cover as they tend to believe that nothing will happen to them and that their savings will take care of things in any adverse situation, says a survey.

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What was even more alarming was that only 14 percent of those insured were women, who actually needed greater financial security than men, said the study carried out by the National Council of Applied Economic Research, India's premier economic research institution, in collaboration with Max New York Life Insurance Company.

The survey sought to answer the vital question – "How financially protected are Indian households", by assessing how India earns, spends and saves?

Disclosing the survey report here Friday, Max New York Life senior vice president Kenneth Sanoo said: "There is a lack of understanding about the real benefits of life insurance towards both financial protection and long-term wealth creation."

Referring to Uttar Pradesh, he said "about 42 percent households in the state simply kept their savings at home while 54 percent deposited their savings in banks. But the larger chunk still did not believe in seeking an insurance cover."

The key findings were obtained from a sample of over 63,000 Indian households, including over 8,800 in Uttar Pradesh and 280 in capital Lucknow. It was felt that the most of the savings of households in the state were "misdirected" and "unwise".

According to the survey, "though 74 percent of the households in the state were aware of insurance facilities, not more than 15 percent were actually availing these". In Lucknow, the situation was even worse. As against awareness among 95 percent people, insurance policies were held by only 27 percent.

Talking to reporters, Sanoo said: "Indians may be good savers, but not many of them save wisely. Around 81 percent of Indians save but the money is either lying in their homes or in banks".

The reasons for saving vary from emergencies to children's education and old age. As many as 79 percent of households in Uttar Pradesh were saving for children's education, said the report.

According to Sanoo: "Insurance is largely used in India as a tax saving tool rather than as a medium for providing financial security.

"As personal incomes and aspirations continue to grow, coupled with rapid changes and uncertainties, there is a strong need for financial planning."