"What If I Don't Die?" Axis Max Life CEO Sumit Madan On Often Asked Question About Life Insurance

Imagine buying a beautiful car, something you've always desired. Maybe it's a bottle green Bentley or something like that, right? Or a really expensive electric vehicle.

Next, you have to buy motor insurance. Now, imagine you've gone through that one year in Delhi traffic or in Mumbai traffic and you've managed to not scratch it or bump it and you've not gotten into a bad accident. Do you feel disappointed at the end of the year that your money is not coming back to you, the motor insurance? Or do you feel happy that you didn't have an accident?

Now, think of your life in an exchange with that car.

How much value would you put to that life? And how much money would you pay to transfer the risk of that loss of life to somebody else? So, that's where the need for insurance comes into play.

The car scenario was put to Sumit Madan, MD and CEO, Axis Max Life, and he agreed that "it's a good scenario to be in" but that should not stop one from buying a life insurance.

In personal finance space, the often-repeated advice is buy life insurance before you make your first investment.

"The sad reality is many of the young people of the country do come to us and say, what happens if I don't die? And you know, it's just like the example of the car insurance. I mean, it's a good scenario to be in but that should not stop you from buying a life insurance. We always keep saying that's in fact the first product any young individual should buy. And I think industry is coming together. There is a campaign which is called life insurance now," Sumit Madan said.

The Axis Max Life CEO underscored that the cost of insurance has really come down and the cut in GST too has helped the cause.

"What we need to understand is that the cost of insurance has really come down. If you look at the last few years or so, gone are the days when insurance used to be a kind of an expensive product. Gone are the days when there was some ambiguity around understanding of the product, for example. Today, you go to a cafe, you end up spending certain money as a young individual. The cost of a simple term plan is actually almost around 700 to 800 rupees per month. And you get a cover of almost around 1 crore in a country like India," the CEO said.

"I think so one of the discussions around the pricing of the product, I think there's a lot of work that the companies and the regulator and the government has done around it. Two, I think the entire machinery and the ecosystem also needs to change. And there is work happening at every level. I think the campaign around awareness, the more focus around rural areas, the BIMA Trinity program that the government is seriously working on. I think some of those are really making this more of a pull product, for example. When you talk to a typical customer, for example, he or she is looking at a product which is more comprehensive in nature. And I think, again, the BIMA Trinity really resolves it to a very large extent," he said.

Bima Trinity is a three-pronged initiative by the Insurance Regulatory and Development Authority of India (IRDAI) to increase insurance penetration across the country, especially in rural and underserved areas. The strategy, unveiled as part of the "Insurance for All by 2047" vision, is composed of three components: Bima Sugam, Bima Vistaar, and Bima Vaahak.

"As part of the BIMA Trinity, you will have a product which is not only life, but will also cover health, for example. It will also cover property, for example. So one comprehensive solution for the Indians at large. I personally feel that this could be a kind of a UPI movement as far as life insurance is concerned. And the industry can really change. The growth can really fasten," he said.

The CEO lamented the fact that the penetration of life insurance is still around 4 per cent or so, adding there's a lot of room which needs to be covered.

"The artificial intelligence is leading to a reduction in the price. The recent changes the government has done around GST also is really pushing the weight as far as the sale, the momentum around term product is concerned," he said.