2010-01-13

God As Insurance

Efforts like this to help widows is good, but are these a solution? How many widows and kids can be covered through charity?

Many people in India do not take life insurance. These people are bread winners of the family. If/When they die, then what happens to the family? Obviously, the financial position deteriorates and if the spouse is not working and the kids are young, then it is a disaster. I do not know if people behave irresponsibly because they won't be around to see what trouble their kin go through. Or it may be simple ignorance. Or unceasing belief in God. To them, God is their insurance.

Solutions? As with anything else, problems are best handled at individual level when incentives and costs are understood well. And by those who have a stake - financial system, the government and NGOs, in this case, should work toward increasing financial literacy.

PS:
1. And, to break popular myth, cost of insurance, given revised mortality rates in Indian market, is affordable.
2. Insurance as it is understood by many in India is a tax saving instrument. This is caused by the insurance agents who get higher commissions on endowment products than term insurance products. Insurance should be to cover risk. Period.
3. Financial Inclusion is not just about loans. It is more about savings, payment solutions & insurance products to the poor and those beyond the normal reach of financial system.

No comments:

2010-01-13

God As Insurance

Efforts like this to help widows is good, but are these a solution? How many widows and kids can be covered through charity?

Many people in India do not take life insurance. These people are bread winners of the family. If/When they die, then what happens to the family? Obviously, the financial position deteriorates and if the spouse is not working and the kids are young, then it is a disaster. I do not know if people behave irresponsibly because they won't be around to see what trouble their kin go through. Or it may be simple ignorance. Or unceasing belief in God. To them, God is their insurance.

Solutions? As with anything else, problems are best handled at individual level when incentives and costs are understood well. And by those who have a stake - financial system, the government and NGOs, in this case, should work toward increasing financial literacy.

PS:
1. And, to break popular myth, cost of insurance, given revised mortality rates in Indian market, is affordable.
2. Insurance as it is understood by many in India is a tax saving instrument. This is caused by the insurance agents who get higher commissions on endowment products than term insurance products. Insurance should be to cover risk. Period.
3. Financial Inclusion is not just about loans. It is more about savings, payment solutions & insurance products to the poor and those beyond the normal reach of financial system.

No comments: