Life Insurance Market in India
Life Insurance Market in India
According to the website of the Insurance Regulatory and Development Authority of India (IRDA), the insurance industry of India consists of 52 insurance companies, of which 24 are in life insurance business and 28 are non-life insurers. Life Insurance Corporation (LIC) is the only public sector company among all the life insurance companies in the Indian market. In the non-life insurance market, six out of the 28 non-life insurance companies are public sector insurers. There are two specialized insurers among the government-owned non-life insurance companies, which are the Agriculture Insurance Company Ltd for Crop Insurance, and the Export Credit Guarantee Corporation of India. In addition to the 52 insurance companies in the Indian market, there is only one national re-insurer, the General Insurance Corporation of India. The Insurance Laws (Amendment) act of 2015 provides for an increase in the foreign investment cap in an Indian insurance company, from 26% to a composite limit of 49%, with safeguards in place to ensure Indian ownership and control.
Performance of the Indian Life Insurance Market in Recent Years
Insurance penetration in India, as measured by the ratio of premiums collected to GDP, was a low 3.3% of GDP in 2014-15. According to an article on ibef.org, India's life insurance sector is the biggest in the world, with about 360 million policies; the number of policies is expected to grow at a compound annual growth rate (CAGR) of 12-15% over the next five years. The insurance industry expects to see the penetration level at 5% by 2020. India’s insurance market is expected to grow to four times its current size over the next ten years; the current size of the Indian insurance market is USD 60 billion. Clearly, the Indian insurance market presents a huge business opportunity, given that India currently accounts for less than 1.5% of the world’s total insurance premiums and about 2% of the world’s life insurance premiums. This is despite the fact that India is the second-most populous nation in the world. Currently, India is the 15th largest insurance market in the world in terms of premium volume; there is considerable room for further growth in this market.
The Importance of Life Insurance as a Financial Product
Life insurance is a very important financial instrument. One can buy a pure protection product such as a term plan, which pays a lump sum on the death of the insured, as long as premiums have been paid regularly. Term insurance is the cheapest way to buy protection for one’s family in case of death of the insured. Nowadays, many companies sell life insurance policies which are a mix of protection and investment. The policy offers a sum assured payable in case of death of the insured, but also gives a return on the investment during the life of the insured. Such policies have higher charges due to the investment part of the product, but can be a good way to combine protection and wealth creation. Bharti Axa Life eProtect is a pure term insurance plan. As the name suggests, the plan can be purchased online from the convenience of your home. Bharti Axa Life eProtect+ is a term insurance plan that offers the choice of receiving the sum assured as a lump sum, or as monthly payments over a pre-specified period of time. Such a plan helps the family of the insured to meet expenses, without putting the burden on the family of finding ways to invest a lump sum payout. This policy can also be purchased online. Bharti Axa Life Elite Secure is a long-term plan that provides comprehensive financial protection against unfortunate events.