Insurance Seen More As Safety Net Than Investment, Finds CGSI Study

Mumbai, Dec 20: A recent consumer awareness study on insurance products has revealed that a large section of the public views insurance primarily as a risk-protection tool rather than a long-term financial planning instrument.

The study was conducted by the Consumer Guidance Society of India (CGSI) in collaboration with students of NCRD Sterling College of Arts, Commerce & Science.

Door-to-door survey conducted across Navi Mumbai

The door-to-door survey, carried out across Navi Mumbai, covered 1,146 people aged 18 years and above from diverse socio-economic backgrounds. Over 200 students participated in collecting primary data, ensuring direct interaction with respondents and the authenticity of responses. The study was guided by Dr Richa Chandra, Coordinator of the Department of Lifelong Learning and Extension (DLLE) at Sterling College.

Majority see insurance only as risk protection

According to the findings, nearly 80 per cent of respondents perceive insurance mainly as protection against unforeseen risks, while only a minority view it as a financial planning or investment tool.

Dependence on agents remains high

The survey also found that almost 60 per cent of policyholders depend on insurance agents or acquaintances while purchasing policies, highlighting a limited independent understanding of insurance products.

Age-wise trends in insurance ownership

An age-wise analysis showed that middle-aged individuals had higher insurance ownership, while younger people displayed relatively better awareness but lower participation.

Health insurance most widely held product

Overall, about 64 per cent of respondents reported having some form of insurance coverage. Health insurance emerged as the most commonly held product, followed by life insurance, while term insurance penetration remained comparatively low.

Claim settlement and transparency flagged as concerns

Claim settlement procedures and lack of transparency were flagged as major concerns by many respondents. Complicated policy documents and insufficient explanation of exclusions and returns were also cited as pain points affecting consumer trust.

Study suggests reforms to boost consumer confidence

Based on public feedback, the study recommended simplifying policy documents, ensuring faster and more transparent claim settlements, expanding the use of digital platforms, and increasing consumer education initiatives. Respondents also stressed the need for insurers to build greater trust through clear and honest communication.

CGSI calls for greater focus on term insurance

Dr Manohar Kamat, General Secretary of CGSI, said it is essential to create greater awareness among people about term insurance options rather than encouraging them to opt for endowment policies.

Concerns over sales-driven approach raised

“Insurance companies have to play a major role in ensuring that more and more people buy insurance. At present, the main focus of insurance sellers, as learned from the survey, is on selling policies rather than on claim disposal or disbursement of funds during times of crisis. It is the duty of companies to closely monitor policies even at the disposal stage. They must ensure that agents selling these policies are subjected to stringent scrutiny so that policies are not only sold but also properly followed up,” he said.

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Experts urge shift from returns to protection

Meanwhile, Dr Sitaram Dixit, Chairman of the society, stated that insurance companies should not focus on short-term returns offered to consumers but should instead promote term insurance policies.

“This will enable consumers to receive substantial financial support when they actually need it,” Dr Dixit said.

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