New generation insurance policy buyers preferring to purchase pure life term plans, online

A term plan is the simplest of products to buy and it is
easier to compare between policies offered by different
insurers, he said.

KOLKATA: Insurance in India has for long been
confused with investment but, according to industry
officials, this perception may have slowly started
changing with many new generation policy buyers
opting for pure life protection plans.

According to top life insurers, the share of term policies
to total business has doubled to about 5-7% in 2015 on
an average. This is, however, just about scratching the
surface as term policies account for around 50% share
in developed economies such as the US and Japan.

Insurers said new generation buyers mostly buy pure
life protection plans online. "Digital marketing has helped
term insurance sales of late. Customers who are buying
term policies are typically better educated and
financially strong," said Rajesh Sud, vice chairman and
managing director at Max Life Insurance .

A term plan is the simplest of products to buy and it is
easier to compare between policies offered by different
insurers, he said.

Term insurance refers to life insurance policy that
provides coverage for a certain period, or a specified
"term". The insurer pays the sum insured in case of
death within the specified term, but the insured does
not get any returns when the term ends.

SBI Life Insurance CEO Arijit Basu said the share of
term policies has risen to about 10-12% in 2015 from
about 5% three-four years ago. Aegon Life Insurance
said 10-11% of its business comes from term insurance
while nearly a quarter of its policies sold are term
policies. "I see the protection market moving very fast
with financial awareness rising. In another 15 years'
time, the market should grow to world class level," said
Amit Kumar Roy, chief distribution officer at Aegon Life
Insurance.

Max Life's Sud said term insurance accounts for 3% of
its business and 6% of number of policies it sells. "It will
be unfair to say that only term policies give protection.
We are also trying to embed protection in our
traditional plans," he said.