BIZ~COM
A notable aspect contributing to the attractiveness of term insurance in India is its affordability despite providing substantial coverage. The monthly premiums for significant coverage, like 5 crore, often ranges from 3,000 to 3500, making it a cost-effective way for HNIs to ensure robust life coverage.
In fact, 25% of the term insurance business in FY23 was accounted by HNIS, a study by Policybazaar shows. It shows that the most preferred cover amount by HNI buyers is 1.75 crore, with roughly 50% of the buy- ers opting for this coverage. Competitive offerings
Rhishabh Garg, Head-Term Insurance, Policybazaar.com, says the introduction of tele-medical check-ups has led to a threefold surge in NRIs purchasing term insurance with considerable coverage. This surge stems from improved accessibility in countries where physical check-ups posed challenges. Tele-medical check-ups not only reduce turnaround time but also enhance the overall customer experience significantly. In fact, the Policybazaar study shows 75% of NRI customers are HNIs.
Garg says, “by offering coverage options up to 20 crore, the industry addresses the substantial financial commitments and assets associated with HNIs. Affordability coupled with expansive cover- age has made term insurance the preferred choice among HNIs, empowering them to effectively manage their financial risks”.
Term insurance market is experiencing sharp HNI interest due to increased awareness of financial security. Seeking comprehensive coverage and tax benefits drive the demand for customised plans. The market’s evolving land- scape and competitive offerings cater to the specific needs and preferences of affluent individuals are further fueling the uptrend. The thumb rule while purchasing a term insurance lies in securing a sufficient life cover to sustain the insured family’s current lifestyle and fulfill future commitments. While some HNIs may consider their current assets as a substitute for term insurance, this approach often proves flawed.
It fails to account for factors like outstanding liabilities, potential inflation, and forthcoming responsibilities like their child’s higher education, marriage, etc., leaving individuals underprepared precisely when the coverage is needed.
Considering coverage duration, HNIS can choose coverage until retirement (60-65 years), aligning with the end of major financial obligations. Alternatively, opting for extended coverage (up to 75 or 80 years) allows them to leave a substantial legacy for loved ones.
Riders significantly enhance the safety net. The waiver of premium on critical illness/ disability rider exempts future premium payments if the policyholder faces critical illness or disability, keeping the life cover intact. Customised riders catering to estate planning and wealth transfer, such as wealth creation or legacy planning riders, are also essential for comprehensive coverage tailored to financial objectives.
