Page 18 - Life Insurance Today January-June 2020

need was never assessed as all the customers were treated 2. Protection for saving for self to face the future needs;
with same unit-linked product irrespective of the target 3. Protection of savings for children's education &
market of A or B or C class cities. welfare;

4. Protection for savings for other contingent purposes.
As there were gaps between the customers' needs and
products matching, it led to increasing lapse rate in the
The key difference between an insurance product and any
post-2000 era hurting capital, non-recovery of expense,
lower profits and higher payback period. Also, the customers other financial instrument is long-term nature of insurance
product. There is a no other financial instrument in India
were made to compare the returns of different unit-linked
which covers for as long as life for both savings and life
products with other investment option as against meeting
long-term savings need. cover; the longest savings product available in the Indian
market is PPF for the term 15 years without life insurance.
In the Indian landscape, the insurance product may be
But insurance is not an investment in the exact sense, it is
pitched as long-term savings with different savings features
more of a protection; it is a protection against the
meeting customers need at different stages of life instead
unfortunate event and protection of meeting long-term
of pitching for return on investment.
savings. Investment return on an insurance product may
not be a point of interest for customers as a competitive
market would automatically fix the customer return The customer landscape in India has gone a lot of changes
over last one decade. Government jobs have been replaced
somewhere as all the players are operating in a same
by corporate, there is a no long-term health cover, there
economic environment, so the focus of life insurance
business should be on meeting the customer's need. is a no social security in term of pensions and others,
spending habits have gone sea change with little focus on
savings, there is an unlikely to support from the family in
The country has a large cross-section of the society in India,
future and also from children. Ours could be the first
there is a large cultural disparity, there is a history of social
generation who will be struggling with various health issues
support through family, and these things make a
led by diabetes.
challenging ground for insurance companies to
manufacture a right product which requires a clear
Not all the sections of the public are investment savvy.
classification of customer's need and customer
They understand the different savings products available
segmentation. A tea stall vendor's insurance need is very
in the market such as mutual funds, direct equity
different from a High Net Worth customer in terms of
product, tenure, the frequency of premium payment, investment etc.
premium amount, the timing of benefits etc. If we look at
the market in general, every product that is sold is based
on the customer's need, be it cosmetic or just chocolate.
The India customers' segmentation is very wide; the
variation from life insurance point of view could vary from:
1. Products class;

2. Ticket dimension;
3. Timing want;
4. Flexibility to customer.

The customers' need could differ for various
reasons like:
1. Protection against unfortunate events;

Defeat is simply a signal to press onward.

18 January - June 2020 Life Insurance Today