International Insurance Awareness Day

Every year, India celebrates national insurance awareness day on June 28th. The specific history behind the international insurance awareness day is intriguing and originated after a tragic fire in 17th-century London.

The fire led to the development of the first insurance company in London and shaped the concepts of insurance. It later influenced the setting up of insurance companies over the globe and the celebration of insurance awareness day. The purpose of national insurance day is simple – to make as many people as possible aware of the importance of having life insurance in India.

Why is Insurance Awareness Needed?

Even after the observation of world insurance awareness day, there is a lack of people buying life insurance in India. And the numbers and statistics support this claim. According to the Economic Survey of 2022, only 3 out of 100 people have life insurance in India. The Insurance Regulatory and Development Authority of India (IRDAI) also recorded in its handbook of Indian Insurance Statistics in 2016-2017 that over 75% of Indians were uninsured.

However, this number is increasing and becoming better than the previous years, probably due to the increase in life insurance buys after the onset of COVID-19. The penetration of life insurance and insurance awareness has increased by a few points every year. Insurance awareness helps highlight the benefits of life insurance and why it is an integral part of family planning and financial management.

What are the Benefits of Life Insurance?

• Financial security in emergencies

  When we are young, healthy, and in our prime, we often forget how unpredictable life can get. This is why we should always stay prepared in the face of emergencies. Emergencies and unforeseen eventualities can be life-altering and affect the quality of our life to a drastic extent. And more than often, they require ample finances to get through.

  These include accidents, critical illnesses, terminal ailments, physical disabilities or injuries arising due to accidents, and other situations. Insurance awareness can help you prepare for a rainy day beforehand, so when the time comes to tackle a difficulty, you already have the tools equipped to deal with it.

• Monetary support to fulfil goals

  As unpredictable and harsh as life can get, it also has its sunny and positive days. And as much as life insurance is for taking care of the challenging days, it is also to fund the happy ones. You can fulfil many of life’s milestones through various forms of life insurance. For instance, term insurance can help you secure your loved ones in your demise.

  That way, they can continue to live their lives and not compromise on their lifestyle and other needs. Other life insurance can help you save and accumulate money for ambitious goals like marriage, higher education, buying a new home or vehicle, planning for retirement, and others.

• Savings and wealth-creation element
  
  One of the best features of life insurance plans is that they can help you save the money you earn in the present and multiply it for the future. Many life insurance plans, apart from term insurance, offer the dual advantages of saving money and multiplying it through various market-linked or non-market-linked investments.

  When you save money, you become aware of your goals and can start building a life that aligns with your beliefs. When your money gets invested, it multiplies and compounds with interest. It might take a few years for that to happen, but your income does not remain static.

• Inflation-adjusted returns

  When you choose specific types of life insurance, you can rest assured you are beating inflation. Inflation is a continuous phenomenon – one that eats away at the value of the rupee and raises the cost of goods, services, commodities, and other amenities from time to time. Inflation affects every sector in the real world – healthcare, housing, rent, education, retirement, infrastructure, banking, and even day-to-day living.

  For instance, if a 2BHK house in a suburban or urban city in India cost INR 10 lakh in 1990, it costs no less than INR 50 lakh to a crore today. The payout or returns received from life insurance can give you inflation-adjusted returns that help beat the rising expenses of living.

• Loan and debt repayment

  Often, when the breadwinner or income earner of a family passes away, the remaining family members can have a hard time coping financially, apart from dealing with emotional loss. What can add to their burden are pending loans and debt repayments left by the breadwinner, even unintentionally.

  Life insurance can keep them secured from such a heavy responsibility by taking the onus of repayment on it. With the money received from life insurance, your family members can repay any existing loans and clear any liabilities so that they can lead a stress-free life and not break their own savings.