HDFC Life ValueNotes Life Freedom Index
A primary benchmark for indicating how financial free an Indian urban consumer is
in terms of her financial awareness, planning, sufficiency, and adequacy of planning
HDFC Life ValueNotes reveals that Life Freedom Index at 58.3 on a scale of 0-100
shows that Indian urban consumers’ current sense of financial freedom is low and
is yet to reach a state of financial nirvana. The lack of financial freedom can
be attributed to many factors - low financial awareness, inadequate planning and
a general feeling that they need to do more to increase their financial sufficiency
and adequacy. While chalking out their financial plans, Indian urban consumers give
highest priority to expected events such as child’s education, dependent’s marriage,
retirement, etc. While unexpected events such as accident, death or natural calamity
rank second on the list of priorities, external factors (inflation, regulations,
and interest rates) are given the least importance. The survey findings reveal that
only 30-36% consumers take into account inflation during financial planning. The
overall Financial Awareness Index for Indian consumers’ at 43.3 on a scale of 0-100
denotes low level of financial awareness. On event awareness, Indian urban consumers’
score at 28.2 is poor, while product knowledge (58.3), though significantly higher,
is still low and needs considerable improvement.
The Life Freedom Index is made up of five sub-indices:
- Financial Awareness Index: Captures the financial product knowledge
and the awareness level of events (expected, unexpected, and external factors) that
can have a significant impact on current and future financial needs of Indian urban
- Financial Planning Index: Reflects the existence of a comprehensive
financial plan, which is regularly reviewed and realigned to address evolving financial
- Financial Sufficiency Index: Reflects the state of Indian consumers
on the sufficiency of their financial plan to meet immediate financial needs.
- Financial Adequacy Index: Reflects the level of confidence of the
Indian consumer’s financial management practices being adequate to live life with
dignity, independently and meet the desired standard of living throughout his lifetime.
- Financial Liberty Index: Reflects the psychological feeling of
‘Financial Freedom’ and ‘Financial Security’ of Indian urban consumers.
These five sub-indices together measure the state of finan¬cial freedom of urban
Indian consumers across four consumer segments all of which fall under the Socio
Economic Classification (SEC) groups A and B:
The report is available for your perusal below.
- Chief Wage Earner: A person who contributes the most to the household
income and is the key financial decision maker of the family, in the age group of
30 – 45 years
- Wisdom Investor: A person who is aged 45 years or above
- Young Aspirant: A person who is aged 20 to 30 years
- Urban Woman: A woman aged 25 to 40 years