Household savings have long way to go

NEW DELHI: A Shocking 96% of Indian households said they feel they cannot survive for more than a year on their current savings in case of the loss of a major source of household income, according to a new survey conducted by Max New York Life Insurance and the National Council of Applied Economic Research (NCAER).

The survey found that while 81% households save, they do not invest wisely and while as many as 54% are confident about their current and future financial stability, only one fourth of Indian households own a life insurance policy. Even in 2007, only 51% of the Indian households deposited their savings in banks, while 36% simply kept them at home. The India Financial Protection Survey also found that only 14% of the life insurance policy owners were women. The key findings from a sample of over 63,000 Indian households, across rural and urban India, indicated that there was little or no awareness about the need for financial protection.

But NCAER, noted, “The results broadly confirm the fact that Indian households are in the habit of saving and that they are fundamentally optimistic about their financial future.”

The survey also found that while life insurance is a protection tool, it is largely used as a tax and saving tool in India. Experts said there is a need to reorient the consumer about the benefits of life insurance for both financial protection and long-term wealth creation.