About 47% of individuals either surrendered their life insurance policies or failed to renew them over the past five years, highlighting a significant gap in financial preparedness in the country, according to SBI Life's Financial Immunity Report.
The report also underscored a disparity between perceived and actual insurance coverage. Despite 68% of respondents believing they have adequate insurance coverage, only 6% possessed sufficient coverage to safeguard their financial interests.
Rising inflation emerged as the primary driver behind the surge in policy surrenders over the last half-decade. The report noted that mounting inflationary pressures have made daily living more challenging, necessitating additional funds for essential expenses. Simultaneously, increased medical costs, compared to previous years, have also contributed significantly to the abandonment of life insurance policies.
Among the notable findings, it was revealed 71% of the population recognises the importance of insurance for achieving financial immunity, yet a significant proportion remains hesitant to invest in insurance products.
Additionally, while 80% of respondents emphasise the necessity of insurance for financial security, 94% of individuals either lack insurance entirely or possess inadequate coverage.
Another insight gleaned from the report was that 37% of respondents have opted for alternative income sources instead of investing in insurance.
Moreover, 41% of those surveyed believe that secondary income streams will further bolster their financial immunity, opting for such options over traditional insurance products.
While 87% of consumers are mulling the purchase of life insurance within the next five years, only 46% of this group intend to acquire insurance coverage within the coming year.
Further, the report outlines a financial immunity score, with life and health insurance policyholders boasting a higher score of 7.4, while uninsured consumers languish at a lower score of 6.3.