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* T&C apply | BJAZ-WB-EC-04701/23

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*5% Discount applicable for customer's first individual life insurance policy, applicable only on first year’s premium. | 5% Discount for salaried customers, applicable only on first year’s premium. | 1% Discount on online purchase is available for regular premium payment and limited premium payment frequency. | 1% Discount will be available for all policies where premium payment is under auto-debit process (as allowed by RBI from time-to-time) through-out the premium paying term.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116.

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*5% Discount applicable for customer's first individual life insurance policy, applicable only on first year’s premium. | 5% Discount for salaried customers, applicable only on first year’s premium. | 1% Discount on online purchase is available for regular premium payment and limited premium payment frequency. | 1% Discount will be available for all policies where premium payment is under auto-debit process (as allowed by RBI from time-to-time) through-out the premium paying term.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

Life Insurance Penetration In India

How many people buy life insurance in India?

While people might understand the importance and need of a life insurance policy, how many actually buy it?

To measure this, a term called life insurance penetration is used. Let’s understand what Life Insurance Penetration is.

 

What is life insurance penetration?

 

Life insurance penetration is an important metric that measures the development and adoption of life insurance in India1. It is one of the ways of measuring how many people buy life insurance in India. Life insurance penetration is calculated as a percentage of life insurance premium to the overall GDP (Gross Domestic Product) of the country1.

As the GDP and the premium collected change every financial year, the rate of penetration is calculated for each financial year. The data is then studied to find out how life insurance is progressing. A higher rate shows that life insurance is reaching a higher percentage of the population.

 

Life Insurance Penetration in India

 

After the life insurance segment was liberalised in 2000 and private players were allowed to operate and sell, the life insurance penetration has seen steady growth till the financial year 2009-102. In the financial year 2001-02, life insurance penetration stood at 2.15%2, which grew to 2.59%2 the next year and reached 4.60%2 during the financial year 2009-10. Here’s a look at how insurance penetration has performed over the years2

In recent years, the penetration has remained stable, but the number is still low. Here’s how India stands against other countries1

Name of the country/region Life insurance penetration for financial year 2021-22
India 3.2%
USA and Canada 2.7%
Advanced Asia-Pacific 6.0%
Emerging Asia-Pacific 2.1%
Advanced Europe, Middle-East and Africa 4.8%
Emerging Europe, Middle-East and Africa 0.6%

 

What Does Life Insurance Penetration Means for a consumer?

 

As a consumer, life insurance penetration does not affect your coverage. However, it does impact how the life insurance industry innovates or reacts to the numbers.

Some of the reasons why insurance penetration may below are as follows3,4

  • Lack of awareness about the importance of insurance
  • Incomplete understanding of life insurance products

 

A low life insurance penetration rate might urge insurers to work towards increasing insurance penetration and insurance awareness among people.

As insurance companies may innovate their products and offer more benefits, customers might get better life insurance plans at affordable premiums. For instance, nowadays, many plans come with inbuilt riders for additional protection. Similarly, under some ULIPs, you might get additional assured returns.

So, understand what life insurance penetration is all about and how it is performing over the years.

Reference

1. https://irdai.gov.in/hi/annual-reports (Page 7 of Part 1 of the IRDA Annual report 2021-22)

2. https://irdai.gov.in/hi/annual-reports (Page 8 of Part 1 of the IRDA Annual report 2021-22)

3. https://www.financialexpress.com/money/insurance/the-key-to-reaching-indian-masses-for-general-insurance/2900430/

4. https://www.outlookindia.com/business/here-are-a-few-ways-by-which-insurance-sector-can-increase-its-footprint-in-india-news-198939

BJAZ-WEB-ECNF-02671/23

~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.

The views stated in this article is not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.