Rishi Mathur – What is a Term Insurance?

Vivek Law: Hello and welcome to this special series Finance Made Simple. Joining me today is Rishi Mathur who's the Chief Digital and Strategy Officer at Canara HSBC Life Insurance. Thanks very much, Rishi for joining us today on this customer education series that we've put together. My first question to you is what COVID has made a lot of people think about is protection and therefore term life insurance becomes the first port of call for people looking at buying insurance. So, can you explain to our viewers what is term insurance and who should make sure that they have one?

Rishi Mathur: Right. So, Vivek great to be on this segment. Term insurance is essentially pure protection. So, it's pure insurance where a customer gets coverage for a promise basically to pay a defined amount, and normally it's a large sum which is given to the customer in case of an unfortunate event happening. It's pure protection insurance, which a customer buys. In return for this promise, he has to pay a premium which is what goes into purchasing the term insurance. It's an interesting thing that why the word term? I mean why do we say it's term insurance? It's a conventional, western concept where there were two types of insurance - one was called term and the other one was called a rule of life. So, this was for a fixed term and that's why the name stuck term insurance. Of course, Indians being innovative, we've come out with the whole of life versions of term insurance as well. That's the interesting part of it. But for our viewers, I think the simple way to understand it is that it's essentially a most simple form of insurance where you are paying for peace of mind. So, you are paying for the premium for coverage which is essentially taking care of the unfortunate event if it happens to the person who's insured. That's the simplest way to put it around. Coming to the second part of your question - who should get term insurance? So, my thought about who should get term insurance is pretty much everybody should have term insurance. Every person who is earning a livelihood and is supporting a family or even if he has a smaller family but is creating some kind of economic activity or is earning a livelihood should be getting term insurance. There are so many interesting points here. For example, we conventionally think that term insurance should be bought only by people who are in their prime working years. I would say that while that is most critical for people who are in their prime working years, however, we also need to make sure that term insurance is bought by people who are conventionally working but maybe not in the formal working sector. For example, we have homemakers. They need term insurance as well because there is a significant economic activity being done and to replace that would incur financial costs. So, you need term insurance to protect homemakers, our spouses who are attending to the home. You need term insurance even when you have retired and you have a dependent spouse because you need your spouse to lead a life of dignity in case you are not there. So, term insurance is practically for everyone who's either earning or you know has a dependent. That's the simplest way to put it.

Vivek Law: Alright, Rishi. Thank you very much for joining us and sharing your perspective with our viewers. It's been a pleasure talking to you.

Rishi Mathur: Thank you Vivek. It was a pleasure.