Buy life cover of 10 times annual income – Fortune India

The pandemic changed things drastically for individuals and organisations globally. Habits, expectations and needs changed, which forced organisations to make customer convenience the core of their strategy. Over the last 18 months, consumer behaviour has changed sharply with online gaining popularity for all financial products.

We conducted a study — Life Freedom Index (LFI) — focusing on the situation prevailing during the pandemic. LFI assessed the state of financial freedom of urban Indian consumers, their awareness about products, adequacy of financial planning and their current state of financial freedom. Nielsen conducted the study in July 2021 across 14 cities, covering almost 2,000 consumers.

The interesting insights were:

Consumers seem less confident about financial preparedness.

Metros and nuclear families are more hit, while smaller cities and joint families have been more stable.

Financial health has become priority —people seem worried about growth, jobs and piling of debt due to loss of income.

Covid–19 has brought about a transformation in engagement of the customer with life insurance driving high product familiarity and preference.

These findings bring out the impact of a few habits that have long prevailed – lack of insurance awareness, not purchasing adequate cover, not preparing for an eventuality such as loss of income or life.

The importance of insurance

Customers are now showing increased interest in life insurance. Health insurance has also gained greater significance as people have realised that a health emergency can mean a financial setback for the family. While this has been a reality for those experiencing the financial impact of cancer or cardiac ailments, a large portion of the population faced this due to Covid-19.

Adequate life insurance enables families to overcome the financial impact of losing the breadwinner, but many did not foresee this. Now, individuals are purchasing life insurance for the first time; and existing customers are revisiting the cover amount to ensure adequate safety for loved ones.

Liabilities such as loans and major expenses such as child’s education and marriage cannot be ignored while planning for financial emergencies. Inflation impacts quality of living with time. The thumb rule of buying life cover of at least 10 times the annual income should not be overlooked.