For many Indian families, life insurance is increasingly moving beyond a one-time purchase or tax-saving instrument to become a long-term financial safety net. An analysis of FY2021-FY2025 business data compiled by the Insurance Information Bureau (IIB) of India shows that policyholders are gradually opting for higher coverage as their incomes, responsibilities and aspirations change. The share of policies with 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 above ₹50 lakh rose 68%, from 4.4 million to 7.4 million, generating annual premium of ₹975 billion.
The change is also visible at the lower end. Policies with a sum assured of ₹2 lakh or less accounted for 65.1% of in-force policies in FY2021, but declined to 53.6% by FY2025. The overall policy base remained broadly stable at around 343 million. At the same time, average annual premium per policy rose 42.6%, from ₹15,567 to ₹22,195, indicating greater financial commitment towards protection. Kamlesh Rao, Chairperson, Insurance Awareness Committee (IAC)-Life, said the trend showed that consumers who remain invested in insurance are strengthening their protection as life circumstances evolve.
Rising incomes, inflation, changing family responsibilities, greater awareness and the Covid-19 experience are driving the shift, alongside more customised insurance products. IAC-Life said starting early can help people secure lower premiums and build protection progressively throughout their financial journey.
