India’s life insurance industry is witnessing a steady shift towards higher levels of financial protection, with policyholders increasingly opting for larger sum assured and higher premium outlays, according to an analysis of FY2021-FY2025 life insurance business data compiled by the Insurance Information Bureau (IIB) of India. The analysis showed that the share of policies carrying a sum assured of ₹2 lakh-₹5 lakh increased by 5.6 percentage points between FY2021 and FY2025, while the ₹10 lakh-₹25 lakh category gained 2 percentage points. Policies with cover exceeding ₹50 lakh rose 68%, from 4.4 million to 7.4 million, generating annual premium of ₹975 billion.
At the same time, the proportion of in-force policies with a sum assured of ₹2 lakh or below declined from 65.1% in FY2021 to 53.6% in FY2025. The overall in-force policy base remained broadly stable at around 343 million, while average annual premium per policy increased 42.6%, from ₹15,567 to ₹22,195. Kamlesh Rao, Chairperson, Insurance Awareness Committee (IAC)-Life, said the data demonstrated that Indians staying invested in life insurance were increasingly strengthening protection as their responsibilities evolved.
The committee attributed the trend to rising incomes, inflation, greater awareness, changing life stages and the financial lessons of the Covid-19 pandemic. Tailored insurance solutions have also improved relevance and accessibility. IAC-Life said life insurance should be viewed as a long-term financial security tool, with early adoption enabling lower premiums and progressive enhancement of coverage as income and responsibilities grow.
