Life insurance is the most preferred investment option of Indians, followed by Bank Fixed Deposits

According to the recently conducted Nielsen Life 2008 survey, Life Insurance has the highest penetration levels amongst investment options with 44 percent, followed by Bank Fixed Deposits which has 35 percent votes. Gold (33%) and Property (23%) are the other favourites among Indians. The current financial turmoil makes it a tough case for equity markets.

Future intention to invest

Again, Life Insurance topped the list of future investment instruments with 30 percent respondents agreeing to consider it as a future investment option, followed by Bank Fixed Deposits (11%), Gold and Property (both 7%), and Life Insurance Child Plans (6%).

“In the wake of the global financial meltdown, most investors are looking at options which help them safeguard their capital. Life insurance is seen to be one such avenue” said Kalyan Karmakar, Associate Director, Consumer Research, The Nielsen Company.

The insurance category

The three key triggers for buying life insurance are Family Protection in case of untimely death, Retirement Corpus and Securing Child’s Future. Interestingly Insurance for Child emerged as a key trigger compared to the previous leg of the survey in 2004. Tax exemption as a trigger to purchase insurance has dropped significantly compared to 2004.

“We see a reduction in the number of people who bought insurance for tax saving with more people buying insurance for insurance sake!”, said Kalyan Karmakar.

Marketing channels

“We have seen a sea of change in the insurance marketing landscape in recent years. Increase in the number of players, significant spikes in media spends, growing focus on instruments like Unit Linked Insurance Plans (ULIPs) and expanding channels such as Bancassurance have led to high noise levels and clutter in the market. Yet, the role of the agent or insurance advisor remains paramount while closing sales”, continued Karmakar.

For 98 percent respondents, Agents are the main source of information on insurance policies. Friends/ peer group emerge as a significant source of information (58%) in comparison to 2004. Media also plays an important role in spreading awareness about various insurance policies, which includes Television Advertisements (55%), Newspapers (35%), and Outdoor Hoardings (33%).

“The boost in media activities in the last four years has helped insurance companies create awareness about their products. Today there is ample information about the various financial products available in the market and people have more clarity about them. Peer groups are also discussing more about finance today than they were doing a couple of years back. All this is acting as a major influence in the final decision-making of consumers”, said Karmakar.

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