How our Indian Culture Affects Consumption Patterns of Life Insurance?
∞ Gaurav Mohanty ∞ Future-Proof Financial Advisor
Certified Life Insurance Advisor/ Planner @ Aditya Birla Sun Life Insurance and Insurance Consultant
The Wheel of Life in the Eastern and Western Philosophy
As quoted by Edgar Schein”
"The Only Thing of Real Importance that Leaders do is to Create and Manage Culture. If you do not Manage Culture, it Manages You, and you may not even be aware of the Extent to which this is Happening."
Life Insurance is a Service that is Abstract, Complex, and Focused on Future Benefits.
Because of the nature of life insurance products, consumers are more likely to respond as directed by the national/regional culture.
There are studies which explain Psychological, Physiological, Geographical, Geopolitical, Anthropological and Sociological effects of our purchasing behaviour towards Life Insurance products.
One of these studies which is widely used for understanding of cross-cultural behaviour is The Hofstede’s Cultural Dimensions Theory
Hofstede developed a cross-cultural communication framework that examines the influence of a society's culture on its members', values and behaviour.
It utilizes factor analysis to create a structure that illustrates this relationship.
(Factor analysis?is a technique that is used to reduce a large number of variables into fewer numbers of factors.)
Hofstede's cultural dimensions can be used to gain insights into life insurance demand.
– It describes?six dimensions?that are
POWER DISTANCE
India has a high-Power Distance score of 77, surpassing the global average of 59.
This cultural trait acknowledges that not all individuals in society are considered equal, fosters bureaucracy, and emphasizes respect for rank and authority.
In high power distance societies, people are more likely to allow someone to make decisions for you or tell you what to do because of your respect for them or because of their higher rank, authority or knowledge and less likely to take responsibility for their own lives.
People may feel that they can rely on their families or employers to provide for their family in the event of their death.
This can lead to lower demand for life insurance.
INDIVIDUALISM
Individualism?refers to the extent to which people in a society value independence and self-reliance.
In individualistic societies, people are more likely to take responsibility for their own lives and to plan for the future hence have a high demand for Life Insurance
India has an intermediate score of 48 on this dimension.
India as a society leans more towards being Collectivist than being Individualist?
In India, strong, cohesive in-groups such as family, community, caste, and religion play a significant role throughout individuals' lives, shaping their actions and expectations.
People strongly rely on family support.
Rejection by family or friends can leave a person ruderless or feeling lost and empty.
Compared to more individualistic nations, collectivist societies like India tend to have lower demand or a negative impact on the demand for Insurance Products
MASCULINITY
India scores 56 on the masculinity dimension, indicating it is a masculine society.
Feminine cultures are very careful to the needs of their Family Members and, stands for a Preference for Cooperation, Caring for the Weak and Quality of Life
People are more likely to purchase insurance to protect their families and communities against financial hardships and less likely to take risks
In contrast, a masculine society focuses on controlling the future
It is driven by success, achievements, and material gains and values assertiveness, competitiveness, and ambition, emphasizing individual accomplishments.
India's high masculinity score positively impacts the demand for life insurance.
UNCERTAINTY AVOIDANCE
It refers to the extent to which people in a society feel threatened by uncertainty.
In high uncertainty avoidance societies, people are more likely to seek out certainty and predictability.
This can lead to higher demand for life insurance, as people want to protect themselves from the financial risks.
In contrast India has a lower score of 40 on the uncertainty avoidance dimension.
India has a higher tolerance for uncertainty, ambiguity, and risk-taking.
The acceptance of the unknown is more prevalent, resulting in fewer strict rules and regulations.
A low uncertainty avoidance index suggests that the majority in India are less inclined to pay higher insurance premiums to reduce risk.
Consequently, this cultural characteristic has a negative impact on insurance consumption.
LONG TERM ORIENTATION
India has a score of 51 on this dimension.
It indicates that it can be classified as either a flexihumble or a monu-men-talist society.
Flexihumble societies emphasize the need to be prepared for a constantly changing future.
Monu-men-talist societies, on the other hand, rely on the past to solve present problems and make future decisions.
In Indian culture, there is an intermediate preference for balancing links with the past while addressing present and future challenges.
Unlike Western societies that place high importance on linear time which means time is a ticking clock, forever uniformly marching forward, it is not as significant in Indian culture.
Religion in India is viewed more as a philosophy that encom-passes diverse perspectives, practices, and ideas.
Religious individuals may be less inclined to purchase life insurance as they trust in God's protection.
领英推荐
The belief is that God sees everything and will take care of those who trust in Him.
As quoted by Carl Jung
“Until you make the Unconscious Conscious, it will direct your Life and you will call it Fate.”
?
And As quoted by Edmund Burke”
“You can never Plan the Future by the Past”
?Cultures that score high on the Long-Term Orientation dimension adopt a pragmatic approach, emphasizing careful money management, avoiding waste, saving for the future, and investing in education.
?This mindset is positively associated with the consumption of life insurance.
?However, as India has an intermediate score on this dimension, a clear determination cannot be made regarding its impact on life insurance consumption.
INDULGENCE
India has a score of 26 on the dimension indicating it is a culture characterized by restraint.
In restrained societies, there is a stigma associated with indulgence, and individuals perceive their actions to be controlled by social norms.
There may be a limited appreciation for leisure time, and societies with low scores in this dimension tend to exhibit doubt, mistrust, suspicion, and a negative outlook.
Indulgence in India is notably low, which negatively impacts the development of the insurance sector.
What do we infer from the 6-Dimensions with respect to India?
India, has a rather?intermediate score of 48.
With regards to India The dimensions of power distance, individualism, uncertainty avoidance and Indulgence have shown that overall culturally it has a Negative Impact on consumption of Life Insurance
While only masculinity has a positive impact on consumption of Life insurance
India
?6-Dimensions Model High/Low Positive/Negative impact
Cultural dimensions play a role in shaping a nation's beliefs, norms, and practices, including those related to growth and the development of the insurance sector.
What stops us from buying Life Insurance is our Traditional Values.
And deprives people from accessing the
“The Miracle of Life Insurance”
The two key Principles of Financial Planning are "Inflation" and "Longevity".
And as stated in the official Report of
The Expert Committee on Longevity Finance was published by the International Financial Services Centres Authority (IFSCA) on April 12, 2022.
International Financial Services Centres Authority (A Statutory Authority established by Government of India)
"Life insurers are uniquely poised to be the only players in the market to cover both the critical risks —
1. The Risk of Dying too Early and
2. The Risk of Living too Long."
It is always wiser to invest in Life Insurance as early as possible and exploit the 8th Wonder of the World "Compound Interest"
with
"Perpetual Uninterrupted Compound Interest"
Image Source: 1000ventures.com
Image Source: hofstede-insights.com
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Life Insurance Awareness Month
Gaurav Mohanty
IRDAI Licensed Insurance Advisor,
4 years Million Dollar Round Table Qualified,
Aditya Birla Sun Life Insurance
Mob/Whatsapp : +91-9766420564, +91-9923574241
Email: [email protected]
Link to my Youtube Channel "Gaurav Mohanty": https://www.youtube.com/channel/UCVJGBb2pjVR5FVPVd53iMZg