Understanding Insurance ft. Beshak Founder Mahavir Chopra

“Insurance is a scam.” This is something that a lot of people have heard or thought before. However, we should take a moment to reflect because this is not the only side of the tale.

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Let's uncover the myths, the realities, and the best ways to safeguard your future when it comes to insurance in India.

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An experienced voice in the insurance field, Mahavir Chopra, discusses the reasons for the low insurance penetration in India and what people can do to protect themselves and their families in a profoundly enlightening conversation on JarXchange.

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The Insurance Gap: It’s Not Just About LIC

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While many blame LIC or conventional insurance systems, Mahavir pinpoints three primary factors contributing to the insurance disparity in India:

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1. Affordability: Many people just do not have the discretionary income to put money down for health insurance.

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2. Awareness and Education: The importance and usefulness of insurance are not adequately taught to many Indians. However, the Gujarati and Marwari communities, known for their high levels of financial knowledge, have been using insurance for quite some time.

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3. Trust Deficit: There’s a cultural wiring that expects a return on every rupee spent. Products like term insurance, which offer no money back unless there's a claim, are often met with scepticism.

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Complex Terminologies Create Fear

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Complexity is a major problem in the conventional insurance market. Take health insurance as an example; it's not exactly reassuring when you first hear about what it doesn't cover. 

Compounding this already difficult commitment process is a fear-based strategy (e.g., term insurance that seems like it invites disaster).

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Mahavir Chopra Backs Personal Accident Insurance

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Even though most people are unaware of it, personal accident insurance is something that Mahavir is very passionate about promoting. 

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People can obtain coverage worth ₹1 lakh for ₹150 and even ₹10 lakh for ₹1,500. It addresses the biggest risk in a nation where road safety is an issue: the possibility of lifelong disability or death as a result of an accident.

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Given the surprisingly high frequency of accidents, he strongly recommends that all young adults out on their financial adventure acquire this policy.

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Start small and steady with digital gold savings on the Jar App.

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But why haven’t we heard of personal accident insurance as much as other types of insurance?

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Unfortunately, expensive products fuel the sector. Agents, whose commissions are based on a percentage, do not promote these inexpensive but life-saving products. This situation means that budget-friendly measures don't always get the attention they need. Hence, personal accident insurance is lesser-known than other types of insurance.

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How Much Term Insurance Should You Get?

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Ignore one-size-fits-all equations. Mahavir recommends a unique strategy:

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• Get a good idea of how much money you'll need for things like house payments, college tuition, a comfortable lifestyle for the family, and long-term objectives (weddings, retirement).

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• Take this amount and deduct your current wealth.

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• The difference is how much coverage your family would need if you died unexpectedly.

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He stresses the need to reevaluate and adjust this figure on a periodic basis or following major life events like marriage, having a child, purchasing a home, etc.

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Bottom Line

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From "waste, if not claimed" to "smart safety net," the way people in India view insurance needs to change. It all starts with: 

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• Building trust.
  
  
• Simplifying products and messaging.
  
  
• Promoting affordable policies like personal accident cover.
  
  
• Encouraging people to view term insurance as a responsibility, not a loss.

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India can go from underinsured to financially secure—one household at a time—with the correct mindset and strategy.

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FAQs

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1. What is the best insurance to buy in your 20s in India?

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It is strongly advised that you have personal accident insurance. It safeguards you from hazards that can impact your earning capacity in your early years, such as accidental death and disabilities, and it's inexpensive (as low as ₹150 for ₹1 lakh insurance).

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2. Why is term insurance important even if there's no money-back?

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Term life insurance is a financial safety net for your loved ones in the event that you pass away unexpectedly. 

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It is a prudent investment rather than a waste because there are no returns, which makes it economical and provides excellent coverage.

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3. How much term insurance cover should I take?

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Make a list of all your debts, your family's living costs, your long-term objectives (such as retirement, higher education, etc.), and your present assets. 

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Ideally, your term insurance will fill this shortfall. Review this gap periodically or following significant life events.

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4. Why do people avoid buying insurance in India?

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A misconception that insurance must provide returns, a lack of financial literacy, and an absence of trust all contribute to this. 

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No one wants to talk about health insurance or term life because of cultural stigmas and the intricacy of the policies.

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5. Is personal accident insurance better than health insurance?

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There is a difference between the functions of health insurance and personal accident insurance. 

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Affordable personal accident insurance protects policyholders in the event of death or disability caused by an accident. 

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The cost of medical treatment in hospitals is covered by health insurance. If you want total peace of mind, get both.

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