- 6/18/2025
Sumit Madan, chief distribution officer, Axis Max Life Insurance called for prioritising term insurance as the first step in financial planning. He said 65 per cent of Indian households have only one breadwinner, which makes term insurance essential as without it, families could face financial distress.
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00:00First of all, thank you so much sir for sitting with us here today to discuss a very, very
00:09crucial topic which is insurance.
00:12Seeing how this hall is jam-packed and so is the event for the last two days, I would
00:17say financial awareness among Indians is rising, be it Gen Z, millennials or boomers.
00:22However, it seems there is one critical aspect of financial planning which is being missed
00:27out which is insurance and more particularly life insurance.
00:32Data speaks for itself, the latest ADI report showed that life insurance penetration in
00:38India declined to 2.8% in the last financial year from 3% in the year before that.
00:45So sir, what do you think is the reason behind such a decline?
00:49I think, thank you Anwadha for that question and it's a very relevant one because insurance
00:54penetration in India needs a lot of improvement.
00:57Some of these even should clearly help.
00:59People like us, we've got a job really cut out in terms of just improving the penetration.
01:03Largely, for example, if you look traditionally, insurance has not been at the forefront as
01:08far as investment ideas are concerned.
01:11I think as a population we've been far more comfortable with real estate, gold or keeping
01:16money in a savings account.
01:18Some of the awareness campaigns like these are just talking to or reaching out to more customers
01:22should really help.
01:23Those are the reasons.
01:24In terms of products also, for example, I think all of us have to really stand up and
01:29take more ownership around it.
01:31Just the design of the products over the last few years has really changed now.
01:35We were discussing outside as far as ULIP is concerned as a case in point.
01:39Today, for example, some of the products that we sell on ULIP are far more competitive with
01:43lesser charges.
01:44So there's a certain image that customers have.
01:46Similarly, for example, term plans as a case in point.
01:49So I think to come back to your question, I think it has got to do with making people
01:53aware and bringing insurance at the forefront as far as the investment decision and the choice
01:58is concerned.
01:59Absolutely, sir.
02:00I think lack of awareness is one of the reasons why there is such a decline.
02:04However, if you could comment on what is its importance in retirement planning particularly
02:10because and also why should one buy term insurance?
02:13Sure.
02:14Yeah, that's again a very relevant one as to why buy term insurance and the importance
02:19in retirement planning.
02:20We run two very interesting studies and one is called IRIS, which is the India Retirement
02:25Index Survey.
02:26There is also something that we run called IPQ, which is the India Protection Quotient.
02:30The interesting trend is that the awareness around insurance and term plan is actually
02:35increasing.
02:36So in the IPQ survey, for example, we've seen an increase as far as the awareness of the
02:41insurance product and term insurance is concerned.
02:44But what is interesting to the audience to mention here and to Anwadha you also, while the awareness
02:48has increased, people buying term insurance has actually come down.
02:52So that's a kind of a dichotomy.
02:54So I think that's a trend which has to change.
03:01As far as the retirement planning is concerned, again, insurance has to come at the forefront
03:05of the insurance discussion.
03:07There is a very interesting survey that we did that there was two critical findings.
03:11One finding was that 93% of people at the age of 50 or 50 and above actually regret that
03:19they did not start the retirement planning much earlier.
03:23And, you know, we keep on saying the sooner you start, the better it is.
03:25Aapki jitni bhi savings hai, ap jitna bhi invest kar sakte hai, please start early because
03:29the compounding comes into place.
03:31And the more later you start in your career, obviously it has a bit of an impact.
03:35Also what happens is as far as retirement planning is concerned, there are these products available.
03:39So today, for example, there is pension fund.
03:41There are different kinds of opportunities which are available as far as insurance products
03:45are concerned.
03:46So again, as part of the entire portfolio, nobody can ignore the importance of insurance
03:52or term insurance as a case in point.
03:54I know that the industry, for example, we've come across so many examples.
03:57Jaha peh, for example, let's say India has almost around 90,000 odd crores of household debt.
04:02Aapne housing loan liya hua hai ya aapka kui or loan chalwa hai.
04:07When you look at a family, for example, in India, for example, 65% of the households
04:12have only one breadwinner.
04:14Now imagine a situation where for whatever the eventuality, if the breadwinner is not there,
04:19what will happen to some of the household debt you've taken?
04:22And we have realized insurance, term plan specially, agar apne housing loan ke saath, for example,
04:28agar apne term insurance liya hua, and God forbid if something happens to the breadwinner,
04:33then you still have a roof on your head and which is so important.
04:36And that's the reason why we keep propagating to the population at large, do not look at
04:40insurance as the fourth or the fifth product you want to buy.
04:45Insurance in fact, especially term insurance anwada, term insurance in fact should be largely
04:50the first product.
04:51And you know, everyone has to play a role.
04:53We did a very interesting survey where we realized that it's only 15% of the companies,
04:58for example, jaha peh term insurance is given to the employees.
05:01And our request to every industry at large is that please make term insurance as an integral,
05:08critical and urgent part of your employees benefit.
05:11That's the first step to start with.
05:13Two, like I said earlier also, products have evolved.
05:15So there are far better products which are available today.
05:18And third and rather the initiative like these, this 40 after 40 outlook money, what you are
05:23doing.
05:24So this is a very critical initiative just to get more knowledge and understanding around
05:28insurance.
05:29Absolutely, sir.
05:30As you mentioned for a breadwinner of a family, it might be very critical to buy term insurance
05:34plans.
05:35However, I would also like you to touch upon who should not buy a term insurance.
05:39Is there a person, individual given their financial situation or family situation that they should
05:44not be looking for term insurance?
05:46Yeah.
05:47I think everyone should buy a term insurance whenever I, my daughter is 20 years old and
05:51whenever I, they're just at the envelope starting a professional career, once the education gets
05:56over, I keep telling everyone that once start saving, the moment you start earning and there
06:02are various rules.
06:03So people in the audience are very intelligent, there are various rules, whichever rule you want
06:08to follow, please do save.
06:09And I tell all the younger people also, please do buy a term insurance.
06:13Eventually, for example, life is uncertain, the sooner you buy, the better it is.
06:17As you move up the hierarchy and rather the products, like I mentioned, for example,
06:21when you just start earning, the criticality of the term insurance may be higher.
06:27Now there are products available, for example, Access Max Life Insurance has also designed
06:30some smart products.
06:31We realize that the need of life insurance, as your corpus, as your savings, as your investment
06:37keeps on going up with the passage of your age, the need for, for example, pure protection
06:41may come down.
06:42Toh usme kaise rahta hai ki when you start with a plan, aapka benefit in case of an eventuality
06:47for the family may be far higher.
06:49Jaise jaise hum dekhte hai ki aapki income barhti jaare hai, savings barhti jaare hai,
06:53from protection, it may become a regular income kind of a plan also.
06:56So some of those products are becoming far more evolved in the industry and the industry
07:00is actually working very hard on this.
07:02And I have to give credit to the regulator also Anwada here.
07:04I think regulator also is taking a lot of steps just to make insurance more affordable
07:10from a pricing perspective.
07:12In terms of awareness, like I mentioned, there are various schemes which regulators are running
07:16just to make insurance more popular in the smaller locations also.
07:18Is there an age where, particular age when one should buy insurance, as you mentioned
07:23ki, offices should start, maybe suggesting people to buy term insurance, people start
07:29off their career at 25, 24, what age is the perfect age when somebody should start thinking,
07:35now is the time I should buy a term insurance?
07:37Aapka first question tha, why insurance penetration is only below 3% at 2.8% as a country.
07:43So I think one, there is a huge untouched base which is available as far the market is concerned.
07:48But like I said, there is no specific age.
07:50Whenever you realize that this is a missing chink in my armor, please do buy insurance.
07:56Our message is still the same, please buy term insurance at the earliest.
08:00Everyone should have a term insurance.
08:02Access MaxLife Insurance for example has worked on specific plans.
08:05For example, for housewives as a case in point, for self-employed as a case in point.
08:10As part of IRS and IPQ survey, we also realize the salaried class, for example, does buy insurance,
08:15especially on term side, but self-employed housewives are an area which is missing.
08:20So I think some of those factors, every company is working and so is the case with us also.
08:24Absolutely, sir.
08:25So there is one aspect about not buying term insurance is where maybe in India or globally,
08:31people do not think about death.
08:34Of course, it's a scary concept, nobody wants to think about death.
08:37Maybe that is one inhibiting factor, why somebody is not looking to buy term insurance.
08:41Another is that people buy for investment, not as a financial protection tool.
08:46That's right.
08:47So what is your take on that?
08:48Yeah, I think you hit the nail on the head Anwada with that question.
08:52Many of us do not like to talk about death.
08:55And it's always a very kind of a taboo would be too strong a word.
08:59But yeah, the emotions run very high.
09:01And everyone feels that I will not do anything.
09:03But you know, that's an eventuality, that's a reality of life.
09:06So I think with some of the campaigns, for example, with the awareness, for example,
09:10we have to make this entire discussion more financial.
09:14Because, you know, we've seen a lot of cases where you go to the family,
09:18and the family members are telling the breadwinner,
09:21you don't have anything about insurance.
09:23Now, we understand the sentiments behind it.
09:25And yes, we understand, we appreciate, we really like those sentiments.
09:29But it's a reality.
09:31So I think at some point you'll have to think about these discussions or these decisions in life.
09:36Again, bringing in the emotions from the family perspective, you have to do it for the family.
09:42And I think that kind of a point of inflection is very important,
09:46where you are able to just zoom out and look at some of these decisions devoid of emotions.
09:51Easier said than done.
09:52But yeah, that's critical that we have to do.
09:54So I think that's part number one.
09:56Part number two, like you were asking as far the entire discussion is concerned.
09:59Another, again, very interesting number that as part of the IRIS and IPQ survey,
10:0457% of the respondents mentioned that I have enough savings only to last the next 10 years.
10:12With life expectancy actually going up, you need to understand not only insurance,
10:16but financial planning as a whole, you need to get into instruments which can last much longer.
10:21Today, for example, while death is a reality, the good part is we as Indians,
10:25the life expectancy is also increasing.
10:27Quality of life, the medical care is improving every passing day.
10:31So I think, again, all the more reason to be aware about various financial products,
10:35just that insurance again has to play a critical role.
10:38Absolutely, sir.
10:39You have rightly said that one should be looking at term insurance from a various point of view.
10:44Okay, so my next question might pinch on the business side a little bit,
10:48but it is important for people who would be buying term insurance.
10:51Please.
10:52I was looking at the ADA report, not quoting the numbers per se,
10:55but I saw that profits have increased of life insurance companies and their operating costs have gone down.
11:01Has that had any effect on the premiums?
11:04Yeah.
11:05Firstly, I want to mention that insurance premium rates in India are amongst the lowest as far as global data is concerned.
11:12So it's still far more cheaper affordable to buy insurance in India.
11:17The best of the plans will actually come at a cost of 15 or 20 rupees per day.
11:21So it's not a huge expense.
11:23And especially when you go to smaller cities, you break down the numbers in terms of per day kind of an expense.
11:28It does make a difference.
11:29So important to mention that, that India could see the regulator could see the product evolution.
11:34It's amongst the cheapest market as far as insurance products are concerned.
11:38Your question is right.
11:39The cost is coming down, which obviously leads to an increase in profit also.
11:44Having said that, it's a more evolved conversation that prices, like I said, are coming down.
11:50But the price of every product is a function of the lot of factors, mortality as a case in point.
11:55So some of the mortality trends, for example, may move into a certain direction.
12:00People are becoming smarter and smarter.
12:02So, you know, there is an element of ured recently.
12:04There's an element of fraud which is there.
12:06It is also a function of some of the investment decisions.
12:08So the good news is that the prices of the products are coming down.
12:12The efficiency, the entire adoption in the industry as far as digital outlook is concerned, does help.
12:18Many companies, including Access Max Life Insurance, for example, we run something called a Bharoseka Tour, for example.
12:23As part of the Bharoseka Tour, we've shortlisted Bharosea Champions in tier 2, tier 3 locations.
12:29Where, for example, they are going and making customers more digital savvy also.
12:34You can just go buy an online insurance policy, for example.
12:37And there is the non-medical limits, for example, are increasing.
12:41So not that you have to run on a treadmill.
12:43Some of those products are becoming far more simpler and the industry is getting evolved from that perspective also.
12:48So, yes, the costs are coming down.
12:50It may not necessarily lead to a kind of a direct correlation and rather between the two.
12:55But like I said, still one of the cheapest markets to buy insurance.
12:58Okay, so that is very assuring.
13:00I hope there is more insurance penetration in the society.
13:04On to that.
13:05How can we bring more term insurance like policies for tier 2 cities?
13:09Because urban people being financially aware would be more willing to buy it.
13:14But people in rural areas might not be aware or willing to.
13:17How would we solve that problem?
13:19Yeah, I'll answer it in two different ways, Anwada.
13:24One, we need to understand that the market around us is really changing.
13:28It's becoming a very different market today.
13:31In terms of knowledge, understanding, everyone is doing a lot of work.
13:34We keep on sharing example from various sports arena, for example.
13:39And, you know, for example, I was reading a lovely article in the morning where it was a discussion about in Olympics how long jump has evolved.
13:47So, there was a very interesting conversation where in 60s and 70s, for example.
13:52If the audience can just visualize with me for a minute.
13:55There is a long jump event.
13:57There is an athlete running.
13:58There is a bar and you have to jump on it.
14:01So, how this used to happen was that it was down below.
14:05And you were down below.
14:07So, there are some pebbles, stones, kankar.
14:10So, you need to be careful when you jump.
14:12So, what the athletes used to do.
14:14And just try and visualize with me, please.
14:15The athlete used to come and run.
14:18He used to jump so that his hands fall first.
14:21And he is able to obviously protect his face.
14:23And then the jump happens.
14:25Over a period of time, that kankar got replaced with, let's say, some very synthetic turfs.
14:30There was an improvement as far as some of the gaddas and the cushions which are kept there.
14:34Just the bar.
14:35Just the training.
14:36Just the physical aspect really changed.
14:38Over a period of time, well, things around the entire event changed.
14:41But the athletes, just because they were used to a certain model, used to jump only in that particular way.
14:47Till the time a gentleman came in and he just changed the way the jump used to happen.
14:52In this Olympic event, not even a small event, in this Olympic event, this particular athlete, instead of just walking up straight and falling in the face.
15:02He changed the entire dynamics and he turned up.
15:04And he turned down and fell down.
15:06And fell down.
15:07And fell down.
15:08The important lesson was that he was not only able to create a new world record.
15:13But when he fell down, obviously that's where everyone noticed that this is the right way to jump.
15:19Because just the way the sport has evolved, the surrounding, the condition has completely changed.
15:26This particular athlete is called Frostbury.
15:29That's the name.
15:30And now this jump is now called, for example, the Frostbury flop.
15:33And now this is the way the long jump happens.
15:37The reason Anwada was sharing this story is that's how the products, that's how the industry, that's how the market and insurance has also changed.
15:45So I think the products are far more competitive than what it used to be.
15:49The digitization efforts that India has taken as a whole has really made insurance far more simpler in terms of understanding of the product, in terms of buying of the product.
15:59Today, for example, the digital penetration is very good in some of the smaller cities.
16:04You look at the reels and you realize that the smaller cities, for example, come out with some very interesting reels.
16:10But it also shows that's where the reach as far as tech digital platform is.
16:14So I think, Anwada, the larger point is market is changing.
16:18It's for owners like players like all of us who have to now reach out at the earliest.
16:23Regulator, like I said, is playing a very critical role and a very efficient role.
16:27There are these rural and social obligation guidelines which have been given to all the insurance companies.
16:32Those are also making it compulsory really to reach out to the customers in the hinterland of the country.
16:37So I think those things put together, I see a very bright future, to go back to your first question, of increased penetration.
16:44The right product to the right segment and the right age as far as term insurance, life insurance, retirement planning is concerned.
16:50So I'm actually very bullish about the industry.
16:52Amazing. So you have answered the question with a very, very insightful example and a story.
16:57Moving on to the next question.
16:59And you mentioned that as the competition increases and the products will become more innovative.
17:05On that note, budget was announced at the beginning of this month and there was a good thing and there was something that was expected but was not there.
17:14100% FDI was introduced for the insurance sector which is being said will bring more options for the customers.
17:21However, there has been another ask which was to remove the GST on premiums.
17:27But that did not happen.
17:2918% GST on life insurance and other insurance products is a bit limiting for people because it pulls out more from their pocket.
17:38So what is your take on that? What should the government be doing?
17:41Sure. Like I said, Anwada, the products are becoming cheaper.
17:45GST, for example, the sooner the government takes a decision, it just helps in broadening the entire base.
17:50So for example, especially India as a market, for example, the idea of reaching out to the more customers also is to make products far more cheaper.
17:57GST obviously plays a role.
17:59But to be fair, I think there are certain products in the insurance industry where GST is already at the lowest level.
18:04Yes, the government is looking at it. We as an industry is very confident some decision positively will come in this direction.
18:10Okay. Absolutely, sir.
18:12So could you also comment more on affordability of term insurance plans?
18:16Because I think that is one thing hugely untouched in the present times.
18:20How can we make these products more affordable for the people?
18:24As you said, we have to move on to more tier two cities.
18:26So affordability, I think, is one key aspect that needs to be tackled well.
18:29That's right. That's right. No, you're absolutely right.
18:31From an affordability perspective also, we keep telling the customers that even if you do a comparison, keep a long term horizon in mind.
18:39See, there are many of the products, for example, where you may just feel the charges in year one are higher, for example.
18:44But when you do a comparison across all asset classes, you will find insurance actually to be equal or cheaper than similar kind of products available in the market.
18:52Affordability of product in India is still very high. And rather, I think what we really lack is the understanding, awareness and knowledge around insurance.
19:02I think that is something that all of us need to collectively work on far more aggressively.
19:06Thank you so much for that. Also, I'll move on to my third question that I asked you, I think, because we are at a retirement planning expo.
19:13And that is one thing we should be talking more about is what is the importance of term life insurance when somebody is planning their retirement?
19:20Not after, not before, but while they're planning it.
19:23Yeah. Like I said earlier, Anwadha, one, there has to be a sufficient corpus as far as retirement is concerned.
19:30In India, for example, the reliance on pension is still very less because it's a very self-employed market.
19:37So I think how and where we invest becomes all the more critical.
19:40Most of the insurance companies today have some very attractive pension funds as a case in point.
19:45So I think, again, whether it's a pension fund, term insurance, you have to carefully plan your retirement corpus.
19:51It's also a function of the risk. It's also a function of the time available because, you know, how much time you want to invest in.
19:58You should divide your investments into various buckets.
20:01There are these golden rules around asset allocation, for example.
20:04So I think one should do it wisely.
20:06Today, technology has evolved so much that even a chat GPT can give you a very good answer as to how asset allocation should be.
20:13The missing link is the execution and the discipline around it.
20:17So that's something that all of us need to be mindful of.
20:19Absolutely. Asset allocation, you mentioned, how will one touch that and bring it into while they're thinking insurance?
20:26Because insurance is not considered very actively while they're planning the financial plan.
20:33So how can one bring it into that aspect?
20:36Yeah. Again, for example, when you look at the asset allocation as a whole, and we started the conversation by discussing about that, real estate, gold still forms.
20:44It's like a top of mind recall for many of the customers still in India or the investors still in India.
20:49And that's where, for example, you have to think slightly more broadly, and you have to bring in instruments like insurance as part of the entire portfolio.
20:58It starts from the very beginning, Anwada.
21:00One, it starts, like we said, from awareness, and two, availability of the product also.
21:05So I think the journey starts from there.
21:07Again, for example, a certain component, depending on the corpus, because these are more individual specific conversation.
21:12Again, depending on the corpus, depending on the needs of the individual, whether it should form a part of 5%, 10%, 15%, 20%, those are specific individual needs.
21:22My request, not only to this room, but to people at large is, it has to be term insurance or largely the insurance products have to be an integral part of the portfolio.
21:32Okay, so that is very rightly answered.
21:34So my next question is, I think people would want to know more about it.
21:38What if somebody misses out buying term insurance and is already in the later 40s?
21:43Will it cost them more?
21:45What happens if you buy it very late, the term insurance plans?
21:49Yeah, I mean, today, for example, the way products are designed, Anwada, yes, the younger you are, the mortality charges are then calculated accordingly, that it's cheaper as far as insurance are concerned.
21:59But the products have evolved so much that the difference may not be very high.
22:02Also, for example, depending on the age and the profile in the corpus, you have products available across various buckets.
22:09So whether you go for a term, for a retirement, for a pension, for a ULIP, for example, there are various instruments, which will really suit the age of the investor, the investment horizon, and the needs and the requirements of the specific customer.
22:22So there are customized, segmented, depending on the age, products available in the market today.
22:27And that's where I think industry has worked very hard, just to be able to give the right set of products at the right age.
22:32So whenever, like we discussed earlier, whenever you decide to buy, you'll have the right product at the right cost available to you.
22:40And should housewives be buying term insurance as well?
22:43Yeah, everyone should buy term insurance, Anwada, there is no doubt about that.
22:47Housewives, to my mind, are actually the most critical part of any Indian household.
22:52All the more reason for them to be insured, all the more reason for them to be financially secure also.
22:57Because, you know, there are products available, which will also make them financially secure.
23:01Not just the death benefit, but I think largely to cater to the needs of the housewives also.
23:06They are products that industry has worked on.
23:08And if you were to touch more into the gendered aspect of it, breadwinners, people who are leading family use, typically, in a stereotypical way,
23:16somebody would think men in the family should buy term insurance.
23:19But what is your take on women and term insurance plans?
23:23Yeah, I think one thinking in India is that only the breadwinner should take an insurance.
23:28By definition, you obviously have a gender skew here, where more males are breadwinners.
23:33But like I said, insurance is for everyone, Anwada.
23:35Agnostic of the gender, everyone should buy an insurance plan.
23:38Great, sir. So you're saying everybody should buy term insurance.
23:41That's right. Absolutely.
23:42One last question, sir.
23:43Please.
23:44I talked about earlier that Budget Head announced 100% FDI in the insurance sector.
23:49Your views on how it is going to affect the life insurance industry and what is going to bring in for the customers?
23:55We personally feel more competition is always good for the customer.
23:59With more players coming in, you know, just the, it's not about just 100% FDI.
24:04It's about just more quality, just more discussion, just more evolution around insurance as a discussion coming in.
24:10More players, once they come in, they will focus not only on selling insurance, but given our low penetration, they will also work largely on improving penetration around it.
24:20So with more players coming in, you will see more such events happening, more such awareness happening, more such discussion on financial products, especially insurance happening.
24:28Again, like we said, Anwadha, like we were discussing, it just helps us increase the base, which is the critical need of DR as for the country's concern.
24:35Do you also see that affecting the premiums?
24:38Like I said, we are amongst the cheapest markets as far as insurance is concerned.
24:43So we may not have a direct correlation there, but yeah, it just keeps everyone on toes, which is good for the customers at large.
24:48Thank you so much, sir.
24:49I think this has been very insightful for all of us.
24:52And I hope this creates more awareness for all of us in buying insurance and being more aware about it, if not buying the term insurance.
24:59Thank you so much.
25:00Thank you, Anwadha.
25:01Thank you very much.
25:02Thank you very much.
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