Mon Jan 27 01:16:00 UTC 2025: ## Low Term Insurance Adoption in India: A Call for Change

**Mumbai, January 27, 2025** – Despite the inherent risks of untimely death and its financial consequences, term insurance adoption in India remains surprisingly low, affecting millions of middle-class families. Only 60-70 lakh Indians currently hold term insurance plans, and even then, coverage is often inadequate, according to a recent analysis.

The article highlights several factors contributing to this low adoption rate. A significant portion of the population is unaware of the benefits of term insurance, often due to a lack of awareness and the fact that it is a “push product” with lower sales incentives for insurance advisors compared to other higher-ticket products.

The price-sensitive Indian market also plays a role. Term insurance, being a pure risk cover with no returns, is often overlooked in favor of products offering tangible returns, even if with lower coverage. Many prioritize immediate financial needs over long-term protection, delaying purchases with the belief that they will acquire coverage “later.” This is often linked to an optimistic bias that underestimates the risk of accidents or illness.

The analysis points out the significant cost advantage of purchasing term insurance early. A 30-year-old can secure a ₹1 crore cover for ₹1,100, while a 40-year-old would pay double.

To boost adoption, the author, joint group CEO of PB Fintech, suggests several interventions:

* **Linking term insurance to CIBIL scores:** Demonstrating responsible debt management by holding term insurance.
* **Expanding tax benefits:** Offering premium subsidies or reducing GST rates on life and health insurance.
* **Improving consumer trust:** Highlighting successful claims and the positive impact on families to address fears of rejection.

The author concludes that term insurance is both a private purchase and a public good, advocating for government intervention similar to schemes used in other sectors to promote broader adoption. The middle class is urged to rethink its financial planning, recognizing the importance of long-term security over immediate gratification.

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