Insurance Illiteracy in India: Survey Says 65% Don’t Understand Their Policies
Insurance Illiteracy : A new survey by InsurTech platform CoverSure has revealed a startling insurance illiteracy crisis across India, with 65% of policyholders admitting they have limited or no understanding of essential policy details like benefits, exclusions, and claims processes.
The findings, released ahead of National Insurance Awareness Day on June 25, paint a worrying picture despite rising policy ownership.
Indians Are Buying More Insurance—But Not Understanding It
According to the survey of over 5,000 respondents from metro and Tier 2 and 3 cities:
- 71% of individuals own between 2 to 5 insurance policies
- Yet 79% are unsure if they have adequate coverage
- And just 35% fully understand their policies
This massive gap suggests that insurance penetration is outpacing comprehension, leaving many Indians underinsured despite holding multiple plans.
Family Awareness is Shockingly Low
The knowledge gap is even wider among dependents:
- 60% of dependents are unaware that they’re even covered
- Only 1 in 10 can accurately describe their policy’s benefits
This lack of awareness often results in missed claims and underutilized coverage, especially in emergencies.
Policy Mismanagement Worsens the Problem
When it comes to organizing and accessing policy documents, Indians rely on fragmented systems:
- 29% use physical files
- 26% depend on spreadsheets
- 24% rely on SMS alerts
- 21% save in digital folders
Such disorganization can delay claims and complicate renewals, particularly when quick access is most critical.
Self-Reliance vs. Reality
The behavioral gap is clear in how Indians seek help:
- 36% prefer human advisors
- 26% are open to digital support
- But 38% believe they don’t need any help at all
Ironically, many in this self-reliant group also lack a clear understanding of their policy coverage—indicating a false sense of financial security.
Industry Voices Call for Simplification and Digital Tools
Saurabh Vijayvergia, Founder & CEO of CoverSure, emphasized:
“Focusing on insurance penetration alone isn’t enough. What people need is insurance they can understand and use effectively. If policyholders don’t know what’s covered or how to use it, the very purpose of insurance is defeated.”
The report recommends:
- Simplified policy language
- Digital-first tools to track coverage and claims
- Open family discussions to ensure everyone knows their coverage
Conclusion
As India’s insurance market grows, this insurance illiteracy could turn into a silent financial risk. Without urgent efforts to educate, simplify, and digitize, millions may find themselves underprotected when it matters most.
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