Top 7 Reasons Why People Don’t Have Life Insurance

Do you have life insurance?

If your answer is yes, you have successfully created a financially secure future for yourself and your family. Unfortunately, not many people own one.

The IRDAI's Handbook on Indian Insurance Statistics³ shows that 246 lakh life insurance policies were issued in 2016-2017. If we assume each policy corresponds to a unique citizen, 25% of the Indian population has life insurance, leaving 75% - or 988 million Indians⁴ uninsured.

Even though life insurance offers many benefits, many people fail to buy one mainly because they believe that it is an unnecessary expense and don't understand its importance.

In this article, we will discuss the top 7 reasons why people don't buy life insurance in India.

1. Unaware Of The Financial Risks

The lack of awareness of the risks associated with not purchasing a life insurance policy may be one of the reasons for India's low insurance rates. Sadly, many still aren't aware of the financial risks they are putting their families at by not buying life insurance. Should something untoward happen to you, your entire family will be left stranded without any financial support. A lack of income would not only disrupt their life goals but even meeting their daily expenses may become impossible.

It is therefore imperative that you keep your family financially secure in the event of such an occurrence. An ideal way to accomplish this would be to consider purchasing life insurance. When you have a life insurance policy in place, your family will receive the cover amount that will enable them to meet their everyday needs and achieve their goals.

2. They Believe They Are Hale and Healthy

It is easy to believe that since you are in good health today, nothing will happen to you in the future. And, there is no need to buy insurance. However, we live in an uncertain world, and life can be unpredictable at times. One untoward event may leave your family with no financial cushion to fall back on.

And, when you are healthy and young, you can get insurance at a lower premium rate. This is because you are less likely to contract a disease, thereby posing less risk to insurers. Please note that purchasing insurance later in life will result in higher premiums.

3. Lack Of Knowledge About Insurance Products

The Indian insurance market offers a wide variety of life insurance products. The options range from term life insurance to whole life insurance to endowment plans to unit-linked insurance plans. As a result, you may feel overwhelmed and even confused.

However, understanding the various types of life insurance is crucial, since you'll gain a better understanding of their value and benefits. Fortunately, it's not as difficult as it sounds. Today, learning about life insurance and its nuances is easier than ever, thanks to the internet and growing transparency. When you have the right knowledge, you can get the right insurance plan and secure the financial future of your family.

4. Procrastination

Young people often think buying life insurance isn't necessary since they don't have many financial obligations at that stage of their lives. Thus, they tend to delay the purchase.

Did you know that insurance premiums are strongly impacted by a person's age and other factors? The later you purchase life insurance, the more premiums you will have to pay.

Time and tide wait for none. So, if you put off buying insurance now, you run the risk of causing financial hardship for your family - in case something unfortunate happens to you.

5. People Think Insurance Is Expensive

Another common reason why people in India hesitate to buy life insurance is that they believe it is expensive. However, the truth is that there are many affordable plans. For a 30-year-old, non-smoker male, the premium for a 1 Crore term plan with a coverage of up to 60 years is approximately Rs 900 with taxes. Sounds like a great deal. Right?

6. Covered Under Group Life Insurance

Many Indian organisations provide their employees with life insurance as part of their group life insurance policy. This is a common reason that Indians find it unnecessary to opt for an individual life insurance policy.

Group life insurance covers a group of people under a single policy. Generally, it is offered by employers to employees, banks to account holders, organisations to members, and so on. It does provide a death benefit payout for your family, but it may not be enough to adequately support them. This is because group insurance policies can’t be customised to meet your and your family’s needs. Moreover, if you leave the organisation, your life insurance benefits cease to exist. By the time you realise you need your own plan, the premiums become expensive, which again discourages you from getting one.

Hence, keep in mind that you need to buy personal life insurance over and above your group life insurance - so as to ensure adequate protection for your family.

7. Existing Assets

The process of liquidating any assets like gold, property, etc. can be time-consuming, making it difficult for your family to access funds when they are in need. And, losing assets like your house or gold ornaments can be a huge blow to your and your family’s lives. Having a life insurance payout can help you prepare for difficult times.

A life insurance policy is an effective financial tool that can help you not only secure your loved ones' financial future but also create wealth over time. So, now that you know the above reasons are not an excuse to put off getting life insurance - ensure your family is financially protected always.