The pandemic changed things drastically for individuals and organisations globally. Habits, expectations and needs changed, which forced organisations to make customer convenience the core of their strategy. Over the last 18 months, consumer behaviour has changed sharply with online gaining popularity for all financial products.
We conducted a study — Life Freedom Index (LFI) — focusing on the situation prevailing during the pandemic. LFI assessed the state of financial freedom of urban Indian consumers, their awareness about products, adequacy of financial planning and their current state of financial freedom. Nielsen conducted the study in July 2021 across 14 cities, covering almost 2,000 consumers.
The interesting insights were:
Consumers seem less confident about financial preparedness.
Metros and nuclear families are more hit, while smaller cities and joint families have been more stable.
Financial health has become priority —people seem worried about growth, jobs and piling of debt due to loss of income.
Covid–19 has brought about a transformation in engagement of the customer with life insurance driving high product familiarity and preference.
These findings bring out the impact of a few habits that have long prevailed – lack of insurance awareness, not purchasing adequate cover, not preparing for an eventuality such as loss of income or life.
The importance of insurance
Customers are now showing increased interest in life insurance. Health insurance has also gained greater significance as people have realised that a health emergency can mean a financial setback for the family. While this has been a reality for those experiencing the financial impact of cancer or cardiac ailments, a large portion of the population faced this due to Covid-19.
Adequate life insurance enables families to overcome the financial impact of losing the breadwinner, but many did not foresee this. Now, individuals are purchasing life insurance for the first time; and existing customers are revisiting the cover amount to ensure adequate safety for loved ones.
Liabilities such as loans and major expenses such as child’s education and marriage cannot be ignored while planning for financial emergencies. Inflation impacts quality of living with time. The thumb rule of buying life cover of at least 10 times the annual income should not be overlooked.
Job losses hit working population hard during the pandemic. As an employee, you are eligible for several benefits from your employer. This includes health insurance for you and dependants, group term insurance, health check-ups, etc. Loss of employment would mean losing out on these. While this phase could be temporary, it could have a long-term impact wherein you may end up depleting savings or borrowing or even selling assets accumulated over time.
India’s millennial customer base is going through a demographic transition. Over half of the population is under 25 and India is likely to have the world’s largest workforce by 2027, with a billion people between 15 and 64 years. This is a vast opportunity.
The buying behaviour of millennials is different. They use various avenues for investments other than banks and are willing to experiment and purchase products at a younger age.
The need for customisable and more personalised products is higher among millennials. Standard one-size-fits-all products are a passé as they are clear about needs. They are open to sharing data and information about themselves and expect the service provider to offer greater customisation to them — including financial products.
2021 has been a year of transition. There have been efforts by government, large organisations, small businesses and customers to change the status quo and bounce back towards a more promising and secure future.
India, with a young population, has greater optimism among businesses and customers. As we recover from the pandemic, we need a secure future. This can be done by starting early and staying disciplined towards your long-term goal with life insurance.