Nithin Kamath: The Biggest Hurdle to Life Insurance
Zerodha’s co-founder and CEO, Nithin Kamath, recently shared his insights on why many people hesitate to purchase life insurance. In a social media post, Kamath provided his perspective, drawing from conversations and observations in the financial industry. He also offered key advice for anyone considering term insurance in 2025.
Kamath emphasizes the importance of life insurance, especially for those with dependents. He argues that it should be a priority. “The first thing you should do when you are starting your personal finance journey is to ensure you have sufficient life and health insurance,” he wrote.
The Jargon Barrier
Kamath believes the primary reason people avoid life insurance is the complex jargon used by insurers. He observed that many find the policies confusing and filled with hidden clauses. This complexity makes it difficult for potential customers to understand the benefits and limitations of various policies. He also noted that insurance companies frequently adjust their terms, including underwriting rules, which makes it even harder for individuals to stay informed.
7 Tips for Term Insurance in 2025
Kamath shared seven key points to consider before buying term insurance in 2025:
- Choosing the Right Insurance Provider is Key: Ensure you select a well-established and reliable insurer.
- Critical Illness Benefits: These remain important, but understand the new limitations.
- Claim Guarantee is the new Buzzword: Look for policies with a solid claim guarantee.
- Instant Claim Payouts: Consider policies that offer this convenient feature.
- Underwriting rules are now more rigorous: Be prepared for stricter health and risk assessments.
- Zero-Cost Term Policies: These are becoming more attractive.
- Married Women’s Property (MWP) Act: This provides additional security for married women.
Insurance Penetration Declining
The need for clear information on life insurance comes at a crucial time. The latest annual report from the Insurance Regulatory and Development Authority of India (IRDAI) shows a concerning drop in insurance penetration. It fell to 3.7% in the last fiscal year, down from 4% the previous year. This marks the second consecutive year of decline.
