Insurance is a hard sell anywhere in the world, but more so in developing countries like India, with a population that is predominantly low-income and largely informal. Life insurance, in its current form, came to India through the Europeans (1818) and was slowly Indianized. However, it was the nationalisation of life insurance and the state backing provided to the Life Insurance Corporation of India (LIC) (1956) that propelled the industry forward to its current heights. Community-based agents appointed by LIC initially and later by other private insurers were pivotal in spreading insurance to the nooks and corners of the country. They were instrumental in increasing awareness and improving penetration. However, the history of how life insurance was popularised in India and its reliance on agentled sales1 has resulted in some challenges that have hindered good customer outcomes. In this note, we discuss how the difficulty of selling life insurance led to bundling insurance with savings2, how such bundling can be sub-optimal, and why such products are popular despite adverse customer experiences. We then make a case for providing relevant, complete, and comparable information that can aid suitable product decisions, sale, and persistence. We also offer a template for what such a Customer Information Sheet could look like.
Find the policy brief, click here.
