Death’s a dirty word and some insurance policies suffer a fate worse than death

About 10 years ago, wedding insurance was launched as a specialised product in the Indian market. Called as insurance for cancellation of wedding due to death or any untoward incident impacting the bride or groom, it was a product that could have been a change maker for the industry.

But it failed to take off. Why?

Because insurers put death in the policy wording which is considered a bad omen.

Enter 2018, the product still sells in the market but is sold primarily as an event cancellation policy carefully avoiding the word ‘death’ unless specifically asked for. This product has failed to take off because a generic event insurance does not ring a bell with the common man.

Insurance, the basic purpose of which is to offer protection to the family of an insured person in case of his/her untimely death, is somehow being presented as one which celebrates life. While living long is a serious concern in the Indian insurance market, insurers shouldn’t shy away from death which is a reality.

In the course of work, often when I chat with insurance companies, they talk about how about death benefit as a feature in the insurance policy is often kept out of sales discussions. The pitch is purely, ‘insurance to protect savings and provide for post-retirement needs’.

But what if the insured person dies?Oh, we don’t talk about it, they say.

Basic term products which would only pay the insurance amount if the policyholder dies are now being transformed into ‘return of premium’ wherein the premiums paid are returned at the end of the term. While the customers sure are satisfied with the assurance that the money comes back, what is not being understood that this reduces the protection portion of the cover and in case of untimely death, the benefits paid will be lower.

Insurance against untimely death, called as pure term insurance, was the first insurance product sold in any market, be it India or abroad. This is what advertisements in 1960s, 70s, 80s and 90s spoke about. But now, it is all about how you can save money through insurance and pay for different life goals.

The fact that the death of the sole bread-winner of a household would mean that the entire family’s lifestyle collapses is a reality in the country. Families with seasonal incomes in rural areas have very low awareness about insurance.

Investment and savings goals can be met with instruments like bank deposits, mutual funds, gold or real estate, what comes to the aid during a death is insurance.

This unique proposition is what sets insurance apart from all other products. What is needed to build it into the brand positioning and advertising as a ‘matter-of-fact’ rather than competing with several other financial instruments for the same set of customers.