In India, the financial downturn has forced many consumers to purchase life insurance cover, but the spend on premiums is shrinking.

It is thought that the average premium could have decreased, because customers think it is wiser to preserve money that spend it one life protection against future risks.

Life insurance policies demand yearly payments, which is a commitment they may be unwilling to take due to looming job uncertainties.

The latest statistics from the insurance regulatory has revealed that the number of life policies issued during the first 10 months of 2008-09 increased to 36.2 million from 35.7 million in the same period of 2007-08.

However, the premium income of life insurance firms has dropped from Rs 54,600 crore to Rs 53,300 crore.

This drop is because of uncertainties from lenders during the recession: “The average ticket size has fallen because investors have lost confidence. They are holding on to their cash,” said S B Mathur, secretary-general of the Life Insurance council.

Despite premiums dropping, it has been suggested that the downturn has forced people to purchase life insurance cover: “People want to manage their money more effectively. The fear of losing jobs haunts many people. They are making investments only in priority areas [...] Economic uncertainty has caused stress to many urban Indians,” said Dr Samir Parikh.

However, insurers have blamed the drop in premiums because of the decline of unit-linked insurance plans (Ulips), which drove volumes in the insurance sector. Ulips now have diminished appeal because of weak stock.