In the standard financial planning, the planning is easy for life certainties like house, parents, marriage, children, their education and finally retirement. All this planning starts right after people become financially independent. Although, there are certain exceptional instances in life in which we have choices rather than adapting. Adaptability ultimately depends upon financial independence and literacy to use it effectively.
According to the statistical report, life insurance penetration in India is also calculated as the GDP premium percentage. In the financial year 2021, the total insurance penetration of India has increased 4.2% according to the recent Economic Survey 2022, it still remains less than the global average ratio of 7.2%. The life insurance penetration of India in FY 21 was marked at a 3.2% ratio almost matching the global ratio of 3.3%, but non-life insurance lagged at a ratio of 1.0% which is way lesser than the global average1.
Why is financial literacy very important for kids?
The recent pandemic phase of Covid-19 has explained the importance of financial literacy. The insurers work hard to simplify the process, build trust, create awareness, and further improve accessibility for boosting penetration levels in India.
Hence on international literacy day, insurance companies are all set to educate young children about insurance and financial stability. Financial literacy for children does not only relate to spending money wisely but also educating and developing the habit of investing and saving money. Here are some of the aspects listed which mention the importance of financial literacy among kids:
- Financial literacy teaches efficient money management, financial planning, and expenses.
- It explains to them to understand the essential and non-essential purchases.
- It helps them to manage the bills and calculate them according to the expenses.
- It maintains the understanding of the importance of saving money.
- It helps to understand the importance of earning money.
How can financial literacy help millennials make more informed decisions?
Millennials today are a substantial segment of the overall country's population. According to the statistics, around 34% of the India’s total population is millennials, which is in the core income group of the country3.
With growing digitisation and growth in digital currencies, being financially literate makes millennials competent to make informed and confident decisions. Insurance companies are getting their best ideas to educate millennials about insurance policy, investments, and portfolios. Multiple insurance apps have been launched to assist millennials in getting more information to improve financial literacy.
Many applications comprise specific investment and financial planning methods with advanced guiding tools. These applications educate the customers with several finance and investment alternatives, a powerful tool to attain financial literacy. With a digital life insurance calculator, premiums, total amount, coverage, and returns can be calculated easily.
Although the millennials must be aware and educated about security aspects of digital transactions along with its integrity, and usage, which would eventually increase their adaptability. Financial literacy also helps millennials to attain education regarding insurance portfolios, financial planning, and investment plans. Millennials must have the core information about insurance and several plans providing coverage and security for them and their families.
Importance of Financial Literacy in the new Indian retail investment landscape:
Today the economy of the countries is on its recovery pavement after the dreadful impact of the Covid-19 pandemic. Hence it requires a consistent surge of insurance policy and investments, particularly in the retail investment landscape. But today, with lagging financial literacy, multiple concerns impact the retail sector's investment ratio and eventually impact the country's GDP.
Financial literacy is one of the crucial aspects for bridging the difference in economic growth and capital collecting journey. It improves the knowledge about how accounting works with avoiding possible debts and making the best of the resources available.
Why, how much and when to buy a life insurance policy?
The life insurance policy concept is developed to provide consistent protection for uncertain risks such as accidents, chronic medical emergencies, or death from an accident or otherwise. Life insurance with some simple terms and conditions offers life coverage and security for you and your dependents. It can be easily calculated with a life insurance calculator.
This protection is for some specific period which is ensured with timely premiums. The accurate time to buy the premiums is at times when you become financially independent. The experts mention that life insurance at a younger age provides better support for a longer time. The life insurance premiums cost varies according to age, and more the age higher will be the premium.
How to protect yourself from insurance fraud?
With the increase in insurance popularity, there is a consistent increase in insurance fraud. Hence on International literacy day, here are some of the tips to avoid them:
- Always check the credibility and identity proof of the insurance agent.
- While doing online transactions, ensure you check the authenticity of the website and its security aspects.
- Always opt for double authentication to ensure a 2-layer check for any online transaction.
- Avoid sharing the policy details with any third-party agents.
- Fill out the policy application / proposal forms personally.
The life insurance platform is coming together to formulate a secured path within the consumer's ecosystem. People confuse good financial adaptability and decisions in challenging circumstances with inappropriate financial knowledge. The step towards financial literacy is India progressing with advanced methods and approaches, which is the right path for futuristic development.