Indians opt for higher life insurance cover as average premium rises 43%

Mumbai: Life insurance policyholders are opting for higher levels of cover, with the average annual premium per in-force policy rising 42.6% between FY2021 and FY2025, according to an analysis of Insurance Information Bureau (IIB) data.

The number of in-force life insurance policies remained broadly stable at around 343 million over the five-year period. However, the average annual premium per policy increased to Rs 22,195 in FY2025 from Rs 15,567 in FY2021.

Also Read: Corporate cover rates decline amid ample capacity


The data also shows a shift towards higher sum-assured categories.

In FY2021, 65.1% of all in-force life insurance policies had a sum assured of Rs 2 lakh or less. By FY2025, that share had fallen to 53.6%.

At the same time, higher-value categories gained share. Policies with a sum assured of Rs 2 lakh-Rs 5 lakh increased their share by 5.6 percentage points, while the Rs 10 lakh-Rs 25 lakh category gained 2 percentage points.

The sharpest increase was at the higher end of the market. The number of policies with a sum assured of more than Rs 50 lakh rose 68% to 7.4 million in FY2025 from 4.4 million in FY2021. These policies generated an annual premium of Rs 975 billion.

The numbers show that existing policyholders are increasing the amount they spend on life insurance rather than simply adding more policies. With the overall policy count largely unchanged, the rise in average premium and higher sum-assured categories points to a gradual increase in the level of protection being purchased.

Also Read: Life insurers' premium income up 19% in Apr-May

“The IIB data clearly demonstrates that Indians who stay invested in life insurance increasingly recognise its value and strengthen their protection as their lives and responsibilities evolve,” said Kamlesh Rao, chairperson, Insurance Awareness Committee (IAC)-Life. “It is encouraging to see policyholders consistently moving towards higher levels of insurance cover, reflecting a growing commitment to financial security for themselves and their families.”

The data also suggests a change in the profile of life insurance ownership. The proportion of policies carrying very low levels of cover has declined, while every higher sum-assured category recorded growth between FY2021 and FY2025.