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The sachet revolution in insurance
When you think of insurance, you think about superlative things, right? Like a long-term commitment, a sizable annual premium of several thousands, a significantly high cover spread across two decades or more - you get the idea. But what if we told you that you could get insurance that costs as little as Rs. 10per annum?
Sounds unbelievable, right? But thanks to the sachet insurance revolution, bite-sized insurance products are now becoming increasingly popular in the insurance industry.
What is the sachet insurance revolution in the insurance industry?
Insurance in India has traditionally been plagued with the issue of low penetration. Simultaneously, in recent years, revolutionary digital changes in the insurance industry have made it easier to collect and analyse customer data to better understand what today’s insurance buyers are looking for. So, with an aim to solve the problem of low penetration, insurers in India decided to give customers a product they cannot say no to - sachet insurance.
The sachet revolution is one of the most recent changes in the insurance industry aimed at gratifying customers and thereby, increasing insurance coverage in the country. This phenomenon was born when insurers realized that today’s customers may not be very happy paying premiums in the range of Rs. 10,000 or so for their insurance coverage. But if those costs were broken down into much smaller amounts, it makes insurance more affordable to everyone.
Also, with traditional insurance products, the benefits only come into play much later in life, and it’s hard to understand the significance of such a long-term cover. But sachet insurance products, also often referred to as bite-sized insurance plans, offer small-ticket covers that give immediate or short-term benefits. This is more in tune with what the millennial generation is seeking.
Examples of sachet insurance
There are many examples of bite-sized products in the insurance industry today. Many insurance providers are offering disease specific covers such as:
- Dengue insurance
- Malaria insurance
- Insurance for vector-borne diseases
In addition to insurance coverage for diseases, the sachet insurance revolution has also brought into its ambit many unconventional and innovative insurable incidents. Here’s a closer look at some small ticket, context-based products available in the insurance industry today.
- Fitness insurance for accidents sustained during workouts
- Marathoner’s insurance for injuries sustained during a marathon
- Spectacle insurance that is handy in case your spectacles accidentally break
- Cyber insurance to protect against online frauds
- Mobile insurance covering screen damage, accidents or theft of the phone
See how interesting and innovative these products are? They essentially help cover all the major expenses that an average individual encounters in the course of everyday life.
What drives the popularity of sachet insurance?
The rising popularity of bite-sized insurance products can be traced back to three key characteristic features. Check them out below.
Sachet insurance products are very simple to understand, making them extremely ideal for new insurance buyers. The mechanism of working remains the same as traditional insurance, but bite-sized products are simpler to buy. The paperwork is less complex and there are no medical tests or extensive procedures. In other words, buying a sachet insurance product is almost instantaneous, making them very appealing to a generation where nearly everything is fast-paced.
Sachet insurance is also highly affordable. For the average individual, it’s easier to accept the possibility of paying something to the tune of Rs. 100 every month for the short-term, as opposed to committing Rs. 50,000 or so each year, for the next 20 years. The former seems more affordable, and that’s one of the key reasons sachet insurance is growing very popular among first-time buyers entering the insurance industry’s market in recent times.
These bite-sized insurance products are also highly need-based or context-based, as you’ve seen in the examples above. For buyers, it’s easier to comprehend the need for such specialized insurance products because the coverage is highly specific. Also, these needs may arise over the short-term, as opposed to the future-oriented requirements that traditional insurance generally covers.
Given these reasons, it’s no wonder that the sachet insurance revolution is one of the most potent changes in the insurance industry in recent years. If you are buying bite-sized insurance, however, keep in mind that these products are highly useful - no doubt. But they are not substitutes for long-term insurance. It’s best to have a healthy dose of both kinds of insurance in your portfolio.
A quick recap
- The sachet revolution is one of the most recent changes in the insurance industry aimed at gratifying customers and thereby, increasing insurance coverage in the country.
- There are many examples of bite-sized products in the insurance industry today. Many insurance providers are offering disease specific covers.
- There is also fitness insurance for accidents sustained during workouts, marathoner’s insurance for injuries sustained during a marathon, and spectacle insurance that is handy in case your spectacles accidentally break.
- Other examples include cyber insurance to protect against online frauds and mobile insurance covering screen damage, accidents or theft of the phone.
- The rising popularity of bite-sized insurance products can be traced back to three key characteristic features: simplicity, affordability and need-based offerings.
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