INDIA PROTECTION QUOTIENT 4.0

Instituted in 2019, India Protection Quotient is an annual property by Max Life Insurance in association with Kantar aimed to understand the pulse of the Indian consumers in the financial protection space. The latest edition of the study titled ‘India Protection Quotient 4.0’ aims to reveal the state of Urban Indians with regards to current financial security levels, changing savings & investment patterns, key anxieties & triggers of financial protection in a contemporary world.

INDIA PROTECTION QUOTIENT 4.0

Instituted in 2019, India Protection Quotient is an annual property by Max Life Insurance in association with Kantar aimed to understand the pulse of the Indian consumers in the financial protection space. The latest edition of the study titled ‘India Protection Quotient 4.0’ aims to reveal the state of Urban Indians with regards to current financial security levels, changing savings & investment patterns, key anxieties & triggers of financial protection in a contemporary world.

Key Metrics of Survey

 

India Protection Quotient  

The degree to which Indians feel protected from future uncertainties, on a scale of 0 to 100. It is a proprietary tool developed by Max life with KANTAR for the purpose of assessing how protected urban India is. It is based on the attitudes, mental preparedness around future uncertainties, awareness and ownership of life insurance product categories (Term, Endowment and ULIP)

Knowledge Index

The degree to which Indians are aware of life insurance products, on a scale of 0 to 100.It is derived from awareness across life insurance product categories (Term, Endowment and ULIP).

Ownership Level

The degree to which Indians own Life insurance, on a scale of 0 to 100.
It is basis ownership of financial instruments (Term, Endowment and ULIP).

Security Level

The degree to which Indians feel financially secure and prepared on a scale of 0 to 100.
It is derived from consumer attitudes across a battery of 10 financial facets.
 

Who Did We Ask? 

 

Conducted entirely online, the India Protection Quotient 4.0 surveyed 5,729 respondents across 25 Indian cities including metro, Tier 1 & Tier 2 cities [from 10 December 2021 to 14 January 2022], making this one of the most comprehensive financial studies carried out during the recent wave of Covid-19.

5729

Respondents

25-55 years

Age Group

> 2 Lakhs

Annual Household Income

25 Cities

(6 Metro + 9 Tier-1 + 10 Tier-2)

SEC A/B

 

70:30 Ratio

Males & Females

What Did We Find?

What Did We Find?

India Protection Quotient 4.0-50

Metro-50, Tier 1-49, Tier 2-47

Ownership Level 4.0 - 78%

Metro-86%, Tier 1-76%, Tier 2-72%

Knowledge Index 4.0 - 69

Metro-72, Tier 1-68, Tier 2-68

Security Level 4.0 - 56%

Metro-56%, Tier 1-57%, Tier 2-54%

 

Here are some of the key insights of IPQ 4.0 that highlight India’s shift across financial priorities and anxieties studied by India Protection Quotient 4.0:

FINANCIAL PREPAREDNESS OF URBAN INDIANS

· Life insurance ownership remains at 78%; investment seen in more diverse life insurance products

While the survey noted no change in the life insurance ownership from IPQ 3.0 Express, the respondents built a holistic portfolio by investing more in life insurance products including term (43%), market-linked (19%) and savings plans (39%).

 

· South zone leads in protection index; trend also visible in metros, Tier 1 and Tier 2 cities

IPQ 4.0 noted an increase in protection quotient for South zone from 49 to 51 followed by North (50), East (49) and West (49) zones respectively. Metros saw a significant rise in security levels from 48% (IPQ 3.0 Express) to 56% in this survey, while Tier 2 cities gained 7 points in awareness of life insurance products and reached 68. With increasing awareness about life insurance, the metros and Tier 1 and Tier 2 cities are gradually rising at par

 

ANXIETIES AND OUTLOOK TOWARDS FINANCIAL PROTECTION

· Majority of Covid-induced anxieties lessen, wellbeing becomes a key concern

As per the survey, most of the Covid-related anxieties such as untimely death of the breadwinner and potential Covid-19 exposure reduced to 59% and 51%. However, personal well-being (62%) emerged as a key concern for urban India with the pandemic straining mental and physical health

· Urban India inching back to normalcy with refocus on children’s education and retirement. Savings & investments continue to grow  

 

A visible increase from IPE 3.0 Express, 48% and 39% respondents are re-prioritizing their savings for children’s education and retirement planning. The focus has moved significantly from medical emergencies where 43% urban Indians, in comparison to 48% (IPQ 3.0 Express) are saving for unforeseen medical expenses. With sporadic lockdowns/restrictions continuing in the country, savings and investments further increased from 53% (IPQ 3.0 Express) to 56% in IPQ 4.0, with basic and luxury expenses reducing to 29% and 15%.

· Safety becomes the ‘most valued currency’ with 88% preferring safe financial products

Safeguarding their future against market uncertainties, IPQ 4.0 saw 88% respondents preferring investments in fixed deposits and guaranteed income life insurance plans. 11% have preferred to invest only in market-linked products such as mutual funds, shares, stocks and ULIP

OUTLOOK TOWARDS TERM INSURANCE

· ‘Real value’ of life insurance strengthened - premium, value of cover and riders form key considerations during term plan purchase

 

71% respondents consider premium to be the most important parameter when purchasing term insurance followed by value of cover (68%) and riders or add -on benefits (52%). 3 times since IPQ 3.0 Express. With the feeling of cover insufficiency increasing 3 times since IPQ 3.0 Express, a visible impact can be seen on term insurance uptake that has risen from 39% to 43% in IPQ 4.0 Express

· South zone sees highest term insurance uptake; Tier 2 cities lag behind in ownership

South demonstrated the highest term insurance uptake with 45%, a 6%-point increase from IPQ 3.0.  Ownership increased to 48% (4%-point increase) and 44% (3%-point increase) in metros and Tier 1 cities, however only 35% term ownership was seen in Tier 2 cities which require more efforts to build term adoption

· Challenges hamper term ownership –  high premiums, claims refund and hidden clauses in terms & conditions pose as barriers 

 

The survey also raises key issues on term plan purchase where 25% urban Indians have associated the plan with high premiums, 21% feel the policy has hidden terms and conditions and 21% attribute it to challenges in receiving refund in case of claim settlement. The insights highlight the need for better awareness, education on term plan and its benefits

· Agent and online are key channels for purchase, human connect is still the preferred mode of communication for future ownership

41% urban Indians purchase term plans through the insurance agent, while 35% make their purchase online, highlighting the importance of both ‘DIY’ and agent support for consumers. 78% respondents will prefer communicating with a customer service representative when buying term plan in the future, thereby reemphasizing the ‘human connect’ in financial services

 

MILLENNIALS & NON-MILLENNIALS

· Awareness for life insurance products among millennials and non-millennials was at par with 69. Realizing importance of protecting their near and dear ones in these unprecedented times, term insurance uptake among millennials increased from 38% to 43%

 

MEN & WOMEN

 

· The survey witnessed a marked increase in the knowledge index for women, from 67 (IPQ 3.0 Express) to 70. While life insurance ownership stood at 78% for both set of respondents, men continue to take the lead over women in term insurance with 44% ownership.


SALARIED VS SELF-EMPLOYED

· Protection quotient of salaried individuals increased from 47 to 53 in IPQ 4.0, overtaking the self-employed segment which remained at 49 owing to the Covid-19 impact on business continuity since last year. Term ownership for the salaried segment increased from 39% (IPQ 3.0 Express) to 47% in IPQ 4.0, whereas for self-employed the ownership fell from 43% to 41%.

 

How Does It Affect You? 

As the Indian Protection Quotient (IPQ) indicates financial preparedness against unforeseen circumstances, a progressive IPQ degree would ensure that India as a country is progressing towards a financially secured future.

As more and more people in India become financially conscious about investment instruments, the financial impacts of unforeseen circumstances can be significantly reduced for the people we care about.

As family is the basic unit of any society or nation, hence a financially protected family ensures a financially protected India. And a financially secured India will be unstoppable to become a developed nation and a global leader with happy & prosperous citizens.

Disclaimer:

 Indians in this context means Digitally Savvy Urban Indians

The study is conducted in top 25 Urban metro, Tier 1 and Tier 2 cities; hence, its findings are representative of metro, Tier 1 and Tier 2 cities of Urban India only.

· Metro – Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Mumbai

· Tier 1 – Ludhiana, Jaipur, Lucknow, Patna, Bhubaneshwar, Vizag, Ahmedabad, Bhopal, Pune

· Tier 2 – Dehradun, Moradabad, Guwahati, Bokaro, Kolhapur, Jamnagar, Raipur, Ujjain, Hubli-Dharwad, Tiruchirappalli

· IPQ 3.0 Express vs IPQ 4.0 (digital versions) data comparison is amongst 25 markets only [6 metros, 9 Tier 1 and 10 Tier 2]

· The minimum sample to conclude any findings of the study is 270 with an error margin of +-5.964%.

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