© Reuters. FILE PHOTO: People wearing face masks wait for a dose of COVISHIELD, a coronavirus disease (COVID-19) vaccine made by the Serum Institute of India, on May 4, 2021 at a vaccination center in New Delhi, India, at a vaccination center in New Delhi, India. REUTERS / Adnan Abidi
By Chris Thomas and Sethuraman N R
BENGALURU (Reuters) – Like many others in their mid-twenties in India, Beverly Coutinho kept putting off buying life insurance until a surge in COVID-19 cases and deaths made her face her own mortality.
"I saw people my age dying, which prompted me to get life insurance right away," said Coutinho, a 24-year-old executive at a public relations agency in Mumbai.
"I don't want my family to be in a situation where they have to fight for money if something happens to me."
The official death toll from COVID-19 stands at 380,000, the third highest after the United States and Brazil, although experts say India's numbers are grossly underestimated due to poor testing for the virus and more people likely have died in India than anywhere otherwise in the world.
When a devastating second wave of the pandemic peaked in India in April and May, the number of people between the ages of 25 and 35 buying term life insurance was 30% higher than the previous three months combined, PolicyBazaar said, India's largest online insurance aggregator.
Term life insurance purchases from the online insurance aggregator InsuranceDekho's website increased 70% in May compared to March.
Insurers did not disclose how many plans they sold, citing the trade secret, but many said they were in "high thousands".
"The current pandemic has increased awareness of the need for financial protection and the inadequacy of current insurance coverage," said Niraj Shah, chief financial officer of HDFC Life Insurance.
Shah's company said it has seen greater demand for protective products from the under-35 age group since the first pandemic hit India about 15 months ago.
Industry executives say inquiries for insurance plans have skyrocketed despite the second wave of infections subsiding, likely due to the strong prospect of a third wave given India's slow start to the mammoth task of vaccinating its population.
Stock market investors still seem unsure whether it makes sense to buy life insurance stocks during a pandemic.
Year-to-date, the NSE Nifty 50 benchmark index is up 13.5%, while HDFC Life Insurance stocks are up just over 2%, SBI Life Insurance is up around 10%, and ICICI Prudential (NYSE 🙂 Life Insurance almost rose 18%.
"Investing in insurers for the longer term makes sense as there is increased awareness of insurance," said Saurabh Jain, assistant vice president of research at SMC Global Securities in New Delhi. Worrying, however, are high ratings and an increase in the number of claims due to the first and second waves.
Despite the lack of robust figures on the growth of the life insurance market, industry analysts see a change in behavior among middle-class families in a country that has traditionally had poor insurance coverage.
"After clothing, food and housing, insurance is now the fourth pillar of a middle-class family," said Ankit Agrawal, founder and managing director of InsuranceDekho.
The life insurance penetration of the Indian population was 2.82% in 2019, compared to 2.15% in 2001, according to the latest annual report from the Insurance Commission.
That is still a significant decrease from a global average of 3.35% in 2019, but then a large part of India's 1.35 billion people will lack the disposable income to make it available for insurance, a situation caused by the economic situation Consequences of the pandemic will be exacerbated.
Term life insurance is popular in India because it is often cheaper and the family will pay if the insured dies within the policy's term of payment, although there is no maturity benefit if it outlasts the plan. The demand for other insurances, including various health insurances, has also increased.
"If someone has thought about buying insurance, they are now," said Avneesh Sukhija, a senior financial analyst at BNP Paribas (OTC 🙂 India.
($ 1 = 73.2725 Indian Rupees)