Over 50% of Indians plan to increase savings: HSBC Insurance

Indians saving a third of monthly income

April 15, 2010 5:09 IST | India Infoline News Service

Over, 50% of Indian respondents plan to increase savings in the next six months, according to the recent HSBC Asian Insurance Monitor. At least a quarter of respondents in Asia intend to save more in the next six months: Taiwan (28%), Korea (31%), Singapore (37%), mainland China (42%), Malaysia (49%) with Hong Kong respondents (67%) being the highest proportion in the region.

In India, 51% of the respondents said that saving regularly through a monthly installment plan is the priority savings strategy in the next six months, while in Hong Kong it was 17%; 37 per cent in mainland China; 36 per cent in Malaysia; 35 per cent in Singapore and Korea and 26 per cent in Taiwan.

 Close to half (43%) of Indian respondents are likely to buy products that offer capital protection, 42 per cent are interested in products that allow for monthly payments and 40 per cent plan to buy products that provide retirement income.

 However, across the region, the main barrier to long-term savings continues to be lack of confidence in the markets:  68% in India consider lack of confidence in the market as the biggest risk to saving for the long term in 2010 with similar numbers in Taiwan (65%), Korea (65%), Singapore (61%), and mainland China (61%).

 Over 58% Indians feel vulnerable with insufficient savings, of which 11% saying they have no savings. Across the region, Mainland Chinese (69%) rank highest with insufficient savings followed by Taiwanese (64%), and Koreans (64%).  In Hong Kong, 24 per cent say they have no savings, the biggest proportion in the region.

 The HSBC Asian Insurance Monitor surveyed 3,563 individuals in seven countries and territories, the largest of its kind in Asia’s key markets.

 David Fried, Group General Manager and Group Head of Insurance, HSBC Holdings plc said: “India, traditionally has had a strong savings culture, with Indians savings a third of their monthly income in various financial instruments. This stood the economy in good stead during the recent financial crisis.”

 Indians are saving around a third (34%) of their monthly income in financial services – pensions, savings in banks, insurance and investments in stocks and mutual funds. Across the region, Asians are allocating between a quarter (Malaysia, 25%) to close to half (mainland China, 45%) of their monthly income for financial services.

 When asked about saving goals, financial security in retirement is top of mind for 56 per cent of Indian respondents, similar to Koreans (57%), Taiwan (47%) and Hong Kong (47%).  It was more important In Malaysia (79%), Singapore (69%). Sixty-five per cent of mainland Chinese save mainly to provide their families with a more comfortable life.

 Among people’s financial uncertainties in the next year, medical expenses emerged as the biggest threat for mainland China (76%), Singapore (69%), India (64%), Hong Kong (61%), Taiwan (59%) and Malaysia (50%); except in Korea where retirement shortfall (61%) was the biggest worry. In India, 39 per cent were also worried about not having sufficient funds for their children’s education.

 Mr Fried added: “Our survey shows that Indians will continue to rely heavily on savings to meet retirement goals and to build up emergency funds. People are feeling the pressure to save more in an era where people are living longer, supporting extended families and coping with escalating medical costs.”

 Over a third (38%) in India say their family will need to use savings for daily and medical expenses in the event of critical illness, death or accident, with an equal number (34%) relying on personal medical/ critical illness insurance and company medical/ critical illness insurance.

 Mr Fried said: “In India, people are keen to save more and seek a disciplined way of saving.  We challenge people’s current view of savings to be more than just keeping cash in their accounts. Savings redefined is about making your excess cash work smarter for you to get closer to achieving your financial goals. There is renewed appetite for investment-linked products that provide growth opportunities and demand for retirement savings plans that allow customers to invest monthly. While people think additional life or medical protection is unaffordable, the reality is for a minimal amount per month, one can top up a basic medical insurance plan with a critical illness rider that buys peace of mind and mitigates the risk that your hard-earned savings are depleted by high medical costs.”

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