Low consumer preference due to unawareness

We met many people who agreed that sudden and unforeseen medical emergencies can happen to anyone.  They even accepted that medical costs are rising. But they didn’t look interested in health insurance. It made us surprised. And we became curious to know the root cause. In today’s scenario where a person is exposed to multiple types of risk in his daily life, it is strange to find that one is not insured for a major risk when an option of insurance is available. And interestingly, most of the people avoid it even after knowing its importance.  If life insurance is a priority, why health insurance hasn’t got required attention? These questions hogged in our mind and we felt the need to find the reason behind all this.  So we dug up more to move forward and to make health insurance a priority for everyone.

I had discussed in my last article of financial literacy about a couple who was seeking health insurance policy just before a required medical treatment. They were not aware of the term of waiting period of a policy neither they were aware of cooling period in which pre existing diseases aren’t covered.  And it wasn’t a single case. People are very less aware about health insurance and many times ignore it considering a complicated product. 

Advisors have a very big role in promoting a financial product. When they put a product on clients’ table, they explain the concept, terms and importance of the product. And in this way they make clients more financially aware while advising a product.  Not much ago, health insurance was a lesser known and unsolicited product. The primary reason was constrained distribution channels. Till some time before, it was also not getting much coverage in media. Though situations are improving and people are being more conscious on healthcare issues, we found that they take time to accept a product. When they came to know a product, they used to enquire about it from near and dear ones. They are more attentive to information they receive from various sources of media.  The most important reason behind this may be lack of trust on their advisors, especially in small cities. Health insurance has been affected by all these factors.

 

Convincing about the need

What we see is that people buy insurance for two reasons- either they are convinced about their need or they are compelled by law. For life and vehicle insurance, either of these two works. While vehicle insurance is mandatory, life insurance is a tax saving tool for common people. Though premium of health insurance also provides tax benefit under section 80D, it looks people are not convinced about its need and so they don’t go for it. We started working on it.

It was our second meeting with a prospect when we presented a sample financial plan before him. As we had experienced people’s reluctance on health insurance, our focus was a little shifted towards importance of health insurance. The client objected over it initially. But soon he was surprised to see the rising graph of medical cost and some more related charts like issues linked with increasing life expectancy. That worked like an eye-opener and he thanked us for it.

One of our clients intensely felt that he doesn’t need health insurance at this moment. The reason- he is young, he is fit and he follows a healthy life style. ‘You mean health is very important for you. So why not spend a little on premium of health insurance so that even if any need arises, you would be able to get best treatment without thinking of medical bills’- it was our question. And he was convinced. Though he was knowing importance of good health, he just don’t want to accept that his healthcare practices may fail. We added health insurance in his healthcare practice and it worked.

When we were planning for our next ‘clients meet’, we asked for a favor from Mr. Prasad who had availed benefit from his mediclaim policy. We requested Mr. Prasad to share his incident with other clients in ‘clients meet’ for their benefit. Though it was very personal for him, he appreciated our views and shared his experience with other clients to communicate the importance of health insurance.

 

‘Do- it-later’ attitude

Our few clients were deferring their decision to take health insurance policy. When asked, a few responses indicated health insurance as an expensive product and so its execution takes time. But we felt clients who gave this response, were in fact comparing it from an investment. As a human being, when we give something with an option of getting something back, we want that reward as soon as possible. But if reward looks too far, we all postpone the action for later. Just like that people don’t want to think of bad health for either themselves or for their family members. And so they felt that the reward of health insurance is too far. As the premium of a mediclaim policy has nothing to give back except medical cost (if needed), they defer it for later. Sometimes the postponement may be just by chance, but we made those clients understand that health insurance itself is like a medical emergency and execution must not be deferred.

One of our clients was postponing the purchase of health insurance. Whenever we asked about it, he replied that he is planning.  Then we took an appointment from him and after discussion we found him confused over the extent to which a health insurance cover can compensate. He just wanted to check it again that would health insurance really add value to his life and would he be adequately and timely compensated in case of medical needs.

It has been a bit tough for us to make those clients ready for additional coverage who are being provided health insurance cover by their organizations.  They fail to assess what their actual health insurance requirements are and tend to overlook the required additional coverage. Assuming it our responsibility, we discussed it several times with them to erase all the confusions and also explained them the fact that it will be tough for them to increase the coverage at a later stage and so they should act timely.

 

Exploring further

Usually the last quarter of a financial year happens to be the tax season for not only taxpayers but also for their advisors. We have found that customers come to us for tax planning but their particular concern continues to avail maximum benefit of section 80C in their given portfolio. They didn’t take interest in health insurance though it also offers tax benefit. We shifted our focus on health insurance in this quarter and passionately asked to clients why not mediclaim. One of our clients, Mr. S. Kumar earlier had 4 life insurance policies in which two were traditional and two ULIPs. He was paying premium of Rs. one lac annually apart from his EPF contribution. His rationale behind these policies was both insurance coverage and tax benefit. But the cumulative amount of EPF contribution and premium of life insurance was exceeding limit of Rs. one Lac under section 80C (as per last financial year).  And yet he was not fully insured. We explained him the real situation and how he can even add a health insurance policy within his given amount. With a better planning, now he is fully insured with a health insurance policy at a minimal extra cost.

We found many clients unsure about easy claim settlement. They think it very cumbersome and long process. Therefore they seek agents’ assurance of easy settlement in case a need arises. Though their fear hasn’t any base, we assured them for any assistance at any point of time. We guided our employees to handle their misconceptions in the right way.

Whenever a new concept or product arrives in consumer’s mindspace, he analyses it with the information available. Unawareness and confusions undermine the importance of the product albeit the need of the product exists. We, as planners, always go deep in clients’ mind to find doubts and make it clear. Recently it happened to us in case of health insurance. We just make our clients and prospects remember the old saying- “Health is wealth” and gradually they believed in the fact- “Buy health insurance when you don’t want it, because you may not get it when you want it.”