NEW DELHI : HDFC Life announced the latest results from its Life Freedom Index (LFI) study. LFI was founded in 2011 and enables the measurement of the “financial freedom” of consumers in four key segments: proud parents, smart investors, young aspirants and smart women. It comprises four sub-indices: Financial Awareness Index, Financial Planning Index, Financial Sufficiency and Adequacy Index and Financial Liberty Index.

According to HDFC life’s August 16 press release, “The Life Freedom Index has been instrumental in providing deeper insight into the ever-changing financial needs of consumers across all segments. The latest LFI study 2021 was carried out together with NielsenIQ in 14 cities (including metros, tier-1 and tier-2) with 1,987 respondents. The methodology for answering was carried out in a face-to-face interview. “

Vishal Subharwal, Head Marketing, Digital Business and E-Commerce, HDFC Life, said, “The Life Freedom Index is our barometer for measuring financial awareness, planning, and plan appropriateness. We have seen changing trends over the past few years. What makes the report different this time around is the pandemic and its impact on consumer confidence. “

According to the press release, some of the key findings are:

In 2021, the LFI recorded a 4.8 point decrease from 2019, indicating the effects of Covid-19. Consumer confidence was low after the two waves. The current financial plans appear inadequate. Therefore, the sharpest decline can be observed in the financial sufficiency and adequacy index.

Subharwal said, “The 4.8 point decline in the index suggests that the health pandemic has evolved into a financial problem with various challenges.”

Second, the effects of Covid-19 are more severe on all metros compared to Tier 1 and Tier 2 cities.

Third, nuclear families were hardest hit by the pandemic, while families together were stable, possibly due to a better support system in times of crisis.

Fourth, nearly 90% of consumers have faced some salary cuts or lost business, which is why respondents are still concerned about Covid-19.

Fifth, the three most important concerns about the future – economic slowdown, job insecurity and fear of debt due to a lack of income – drive a low level of confidence in financial provision.

As we disclose facts about the growing awareness of financial planning and life insurance, some of the key findings are:

First, financial awareness has increased during the last two waves. Consumers want to empower themselves with a better understanding of financial planning.

Second, maintaining living standards in the face of unexpected adverse events was an important factor that created the need for financial security

Third, Covid-19 has highlighted the importance of life insurance. 41% of respondents took out life insurance after the first wave, which enabled them to plan better for the second wave.

Trends at segment level

The effects of Covid-19 on financial provision are more pronounced among proud parents, followed by the segment of intelligent women. This is mainly driven by the feeling of insufficiency. Wisdom investors and young aspirants also saw the least impact. This is probably due to reasons such as the maturity of the investments or no dependent or lower financial obligations.

Subharwal said, “Better financial planning with life insurance has emerged as a necessity of the moment. We hope that those with responsibility will value financial security to protect their families from unforeseen events.”

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