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Sudhanshu Ranade

Chennai , Aug. 9

THE expectation of life at birth has vastly increased over the past 50 years.

The expectation of life, once one has past the perils of early childhood, too has shown a dramatic increase.

According to the mortality rate schedule for LIC annuitants, those who have reached the age of 20 can on an average look forward to living another 57.5 years, well past their working lives.

Thanks to these dramatic developments, some private sector life insurance agents have begun actively peddling the line, `We don't sell insurance; we sell investments - insurance comes free.'

Yet the fact remains that youngsters starting out on their lives are still nearly as critically dependent on life insurance as were their parents. Life insurance of the `pure' sort, rather than plans that offer insurance coupled with attractive rates of return.

The priority still has to be insurance, then savings and then investments. This comes out quite clearly from LIC's mortality schedule for assured lives in India. Though this schedule can be assumed to be heavily weighted in favour of urbanites, who generally enjoy longer life spans, the final figures for 1994-96 reveal that the cumulative probability of a 21-year-old dying before reaching the age of 60 was one in six - i.e. about 0.16.

Life insurance, devoid of frills, is thus an absolutely critical requirement for single income households. Or for households which would suffer a serious erosion of living standards if the better paid spouse were to die prematurely, before retirement.

Even in respect of the upwardly mobile, who generally married late and and jumped past the stage of savings into the stage of investments by the time they are 50, it is a sobering thought that one in 25 people aged 32 died before he or she reached the age of 50.

The possibility of both parents dying is perhaps best covered by means of a good accident insurance policy, covering not only death but serious disability as well, rather than through two life insurance policies. This is because the probability of both spouses dying is a multiple of the chances of anyone of them doing so (for example 0.16 X 0.16=0.025), because life insurance policies do not generally cover crippling disabilities.

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