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Indian families at financial risk The Hindustan Times, Feb. 22, 2007 Indians are high on confidence, but low on financial security. Though 96 out of every 100 Indian family may be in dire straits on losing its breadwinner, a whopping 69 of them are confident about their financial well-being, a classic example of an under-insured populace. According to a survey conducted by the National Council of Applied Economic Research (NCAER) and Max New York Life, 96 per cent of Indian households are financially at risk on losing the breadwinner of the family. However, 13 per cent of them are ‘most confident’ and 54 per cent ‘fairly confident’ about their financial well-being, while 15 per cent said they are clueless about life without their bread winner. The survey, conducted over 63,016 families points out that about half of the rural households and more than 60 per cent of urban India are confident on their financial security. “This clearly indicates that Indians do not take a long-term view of their financial security and hence their optimism is misplaced,” the survey said. However, there are positives too. About 81 per cent of poor households including those exposed financial risks, were found to be saving in one form or the other. While 36 per cent of the said category kept money idle at home, around 51 per cent deposited in bank accounts. At the lowest of income groups, urban India invests almost 6 per cent of its income despite having a deficit of about Rs 9,500 per year, while rural India puts in a little over 3 per cent and suffers a deficit of approximately Rs 6,000 per year. One of the disturbing facts thrown up by the survey is that Indians borrow mostly to satisfy unproductive needs like routine expenditures including food, with rural India leading the pack. Further, one-fourth of rural Indian households approach local moneylenders to meet routine expenditures. NCAER is of the view that with so many families exposed to financial risk, insurance acquires prime importance. The survey shows that only 24 per cent of Indian households own insurance policies. Only 19 per cent of rural India holds life insurance policies. In the last year about 4 per cent of Indian households bought insurance policies. While 6 per cent of urban families got insured last year, only 3 per cent of the rural households were insured in 2006.