The primary reasons for buying an insurance policy, whether life or non-life is to protect us from vagaries of life. We do not invest in insurance for returns; rather we invest in it for regrettable necessities. Though a large proportion of policies available in the country provides for returns, but nobody is looking for returns to the inflation rate.
Some people do look for tax concessions, but lots of things have changed now. First, tax rates are not so high as they used to be. Secondly, concessions are still limited to a 20% tax shield. Finally other tax saving schemes , like public provident fund offers better returns.
So what does insurance offer, perhaps peace of mind, but even that takes time, due to poor claim performance.
In India insurance is sold and not bought. Life Insurance Corporation has nearly eighty products, but investors know only about a handful. That’s because the agents of LIC push policies with the highest premium to pocket a higher premium.
Same is the case with General insurance. Companies offering General insurance products-like medical, housing, motor and industrial insurance- have more than 150 products to sell. But awareness is even lower than life insurance products. It becomes obvious that GIC lacks the marketing results.
Change
Whether public sector companies like it or not change is the around the corner. General insurance sector will soon be opened up to private and foreign competition. The potential for the new entrants is immense; life and non-life premiums add up to around 2% of the GDP, where as the global average stands at 8%. Indians as such have a high savings rate and bridging the existing gap points at immense potential.
Some people do look for tax concessions, but lots of things have changed now. First, tax rates are not so high as they used to be. Secondly, concessions are still limited to a 20% tax shield. Finally other tax saving schemes , like public provident fund offers better returns.
So what does insurance offer, perhaps peace of mind, but even that takes time, due to poor claim performance.
In India insurance is sold and not bought. Life Insurance Corporation has nearly eighty products, but investors know only about a handful. That’s because the agents of LIC push policies with the highest premium to pocket a higher premium.
Same is the case with General insurance. Companies offering General insurance products-like medical, housing, motor and industrial insurance- have more than 150 products to sell. But awareness is even lower than life insurance products. It becomes obvious that GIC lacks the marketing results.
Change
Whether public sector companies like it or not change is the around the corner. General insurance sector will soon be opened up to private and foreign competition. The potential for the new entrants is immense; life and non-life premiums add up to around 2% of the GDP, where as the global average stands at 8%. Indians as such have a high savings rate and bridging the existing gap points at immense potential.