Missing Insurance In India
Financial literacy and financial inclusion are amongst key factors reflecting any economies development stage. Better financial literacy implies larger population having necessary awareness about and access to varied financial products (viz. banking systems savings products, credit products, transaction systems, insurance). Of these, Insurance is still least known to larger part of India's population. Even amongst those who have product awareness, very few possess capability to differentiate between `pure insurance' and 'insurance cum investment' products.
Going further deep down into insurance awareness amongst those who understand insurance, we often find most of them juggling between the products that are available in the market. Very few would really analyse and appreciate which insurance product is really needed and whether needed products are available or not. Further, we also need to understand the way Insurance industry has run so far was hugely based on fear of uncertainties. And if you look at how insurance products are advertised today is also based on the concepts hovering around same fear factor. Puzzled between so many complexities there also lies a missing block on the insurance foundation for a financially secure life.
What Is It?
It is called Disability Insurance.
First big question one may ask is 'What this Insurance is all about'.
To answer this question, let's talk about today's one of the most prevalent terms `Stress'. We often find most of the people talking about Stress and felling Stress so much that it becomes number one factor affecting quality of life. And this does so irrespective of our financial richness. So how does it affect people in all strata of society. It causes all types of lifestyle disease. These in turn lead to a life which is either partially disabled or at times fully disabled. This would cause loss of income, instability in career, lifestyle downgrades. All these really hurt the person going through it and the loves ones too. Everyone involved is deeply impacted to their core, so much that it affects or even jeopardise their understanding and ideology of life itself. But seldom one realises that there are measures which can be put in place to cope up with such situations.
One such measure is availing Disability Insurance. To keep things simple, this insurance can basically give support by providing security of funding regular income when we face disability situation (accidental or non-accidental). It aims to primarily replace regular income and keep everything at home running the way it was. Once we introduce this in Indian ecosystem, it would aim to complete the insurance ecosystem, which will then provide required financial support for healthcare, opportunity income loss due to health conditions and death benefits too. It also aims to improve quality of life (Note: Though India is just behind US and China in term of PPP GDP numbers, when we see quality of life index India is still behind 47 countries.)
Its noteworthy that EU nations spent about EURO 276 billion over disability benefits in 2018.
Now, once we have understood disability insurance, we can argue that it is already available as rider to other insurance products. However, why just a rider and why not a full-fledged direct insurance product? Further, we find it restricted to accidental disability only. The question lies in how to get financial security where disability is not a result of accident. How do we secure that? On top of it, for accidental disability insurance too, the sum assured is very limited and not adequate to provide sufficient coverage. The big question is how do get this insurance. And the simplest answer would be IRDA provides framework and guidance to insurance companies. World has it. India is yet to have it.