How EMI-Based Premiums Normalising Insurance As Monthly Habit In Rural India

Bimapay Finsure, a rising fintech innovator, is redefining how Indians access insurance through premium financing—making coverage more affordable in Bharat’s heartland. “Premium financing is considerably impacting insurance use in smaller cities by lowering the cost barrier,” says Hanut Mehta, CEO and Co-Founder, Bimapay Finsure, in an exclusive interview with Bizz Buzz.

By allowing monthly or quarterly EMIs, the model is helping gig workers and informal sector earners secure better protection without financial strain. Mehta highlights the growing comfort with digital insurance in Tier 2 and 3 cities and sees a shift from lump-sum premiums to personalised, embedded, and flexible coverage.

He notes that fintech-insurer partnerships are key to deepening inclusion and tackling policy lapses. With strategic financing models and vernacular literacy initiatives, Mehta believes the industry is well on its way to normalising insurance as a monthly habit—bringing financial security to India’s underserved markets

How is premium financing changing the way Indians buy insurance, particularly in Tier 2 and Tier 3 cities?

Premium financing is considerably impacting insurance use in smaller cities by lowering the cost barrier. Historically, insurance products, particularly health, required a lump-sum payment, making it difficult for middle- and lower-middle-class families in Tier 2 and 3 cities.

With financing arrangements that now allow for monthly or quarterly EMIS, more people are choosing better coverage without breaking the bank. This flexibility especially benefits gig workers, small business owners, and informal sector employees, who frequently have fluctuating wages. Premium financing also allows first-time insurance buyers to investigate long-term protection solutions they might have previously refused due to hefty upfront fees. Enabling bite-sized payments does more than just increase access; it also helps to normalise insurance as a monthly financial habit, comparable to EMIS for smartphones or autos. Over time, this methodology is intended to increase insurance penetration and improve policy persistence in Bharat markets.

What trends are you seeing in digital insurance adoption beyond metro cities?

Digital insurance is quickly expanding beyond India's urban areas, owing to rising smartphone penetration, widespread UPI acceptance, and increased comfort with digital transactions. Consumers in Tier 2 and 3 cities can now access insurance through a combination of entirely digital and physical channels, frequently with the help of agents, microfinance institutions, or fintech apps. Because of its convenience, embedded insurance, which is packaged into travel, e-commerce, or loan activities, is becoming increasingly popular.

Furthermore, the availability of local information, assisted digital journeys, and video KYC have erased many access obstacles. Surprisingly, demand is increasing not only for established products like car or health insurance but also for emergent areas such as cyber protection, daily hospitalisation cash, and income replacement plans. Younger consumers in smaller areas, particularly those aged 25 to 40, are already researching insurance online and expect rapid issuance and fair pricing. This trend foreshadows a broader digital transition and increased trust in online financial services.

How is the rise in health and general insurance premiums affecting insurance penetration among the middle and lower-middle classes?

The rise in health and general insurance rates is driven by broader trends such as medical inflation, growing healthcare demand, and the introduction of more comprehensive coverage alternatives. For medium- and lower-middle-income families, this has resulted in a more considered approach to insurance. People are weighing not only the cost, but also the value, benefits, and flexibility provided by various plans. While upfront prices are higher than before, the industry is responding by offering options such as modular policies, smaller coverage slabs, and EMI-based premium payment models to keep insurance affordable.

Consumers are also becoming more aware of aspects such as wellness benefits, day-care coverage, and digital claim processing, which help explain the overall value. In this changing scenario, the emphasis is shifting from price alone to long-term protection and continuity of care. With advancements in product design and distribution, the sector is well-positioned to service cost-sensitive segments without sacrificing coverage.

How important are partnerships between fintechs and traditional insurers in expanding financial inclusion?

Partnerships between fintechs and insurers are critical for closing the insurance gap in India, particularly in areas where services are scarce. Traditional insurers have the legal frameworks, product expertise, and claims infrastructure, but they frequently lack the speed and digital agility to quickly extend into new markets. In contrast, fintechs contribute innovation to customer experience, credit underwriting, digital distribution, and last-mile access. Together, they can develop embedded insurance solutions that are suited to consumer journeys, such as a loan EMI, a payment wallet, or a healthcare subscription.

These collaborations also enable the development of new underwriting models based on alternative data, allowing persons with limited financial histories to be insured. More crucially, they assist to simplify and personalise insurance for new customers, fostering long-term trust. As the insurance industry advances, these collaborations are no longer optional; they are critical to accomplishing financial inclusion goals and improving the country's overall insurance penetration.

How can premium financing models help insurers tackle issues like policy lapses or renewals?

Policy lapses are a big worry in the Indian insurance sector, and they are generally caused by short-term liquidity issues rather than a lack of desire. Premium financing can be a sensible alternative, allowing customers to turn high premium payments into manageable EMIs. This not only simplifies initial policy purchases but also plays an important role during renewals, when many policies tend to expire. Insurers can boost persistency rates and lifetime customer value by integrating credit solutions at the renewal stage, such as automated notifications, pre-approved offers, or embedded EMI choices.

Additionally, by financing renewals, insurers create a safety net for consumers who might otherwise lose vital coverage during a temporary financial crunch. For insurers, this means a lower cost of reacquisition, better claim ratios, and improved consumer retention. When thoughtfully integrated, premium financing can be a strategic lever to reduce churn and build long-term policyholder loyalty.

How can policymakers encourage responsible lending in non-traditional credit products like insurance premium financing?

Policymakers may help ensure that insurance premium financing expands responsibly and sustainably. First and foremost, this approach must be integrated into the larger framework of regulated digital lending, with clear norms for disclosures, affordability evaluations, and consumer protection. Standardising essential practices such as interest rate disclosures, repayment periods, and dispute resolution would boost trust and openness. Encouraging collaboration among regulated NBFCS, banks, and insurers can increase scale and governance.

Furthermore, creating a lightweight KYC and credit scoring structure designed specifically for small-ticket loans helps boost access without overburdening the system. Education is also important: borrowers must understand what they are signing up for, especially the long-term importance of retaining insurance coverage. Including premium finance as a module in financial literacy programs and insurance onboarding experiences can help to develop a responsible borrower base. A balanced regulatory strategy will help to grow this industry while protecting consumers.

In what ways could premium financing become a strategic tool for insurance companies to expand their reach in Tier 2/3 cities?

Premium financing is essential for insurers looking to expand into Tier 2 and 3 markets. In many areas, the most significant barrier is generally affordability rather than awareness. EMI-based approaches enable insurers to break down that barrier and provide insurance that fits into monthly household budgets. Financing also allows for cross-selling and upselling opportunities. Customers can choose stronger coverage, riders, or family floaters without incurring upfront fees.

Financing becomes an effective conversion tool for agents and point-of-sale personnel, particularly during policy renewals or upgrades. With increasing mobile usage in small towns, insurers can increasingly incorporate financing choices into digital onboarding experiences and agent-assisted apps. Strategically, it enables insurers to retain clients over longer periods, reduce churn, and provide high-intent, low-income sectors with sustainable pricing. As insurers expand into Bharat, premium financing will become an essential component of inclusive, customer-centric growth.

What initiatives can be taken at an industry level to promote insurance literacy along with financial literacy?

To truly boost insurance acceptance, the industry must embrace insurance literacy as a core pillar, alongside financial literacy. Awareness ads should go beyond product benefits and include issues such as claims, renewal importance, and premium financing. Partnerships with educational institutions, self-help groups, and local governments can assist in producing localised, vernacular information that is suited to the requirements of the community.

Furthermore, insurance classes can be integrated into broader financial literacy initiatives spearheaded by regulators such as the RBI, SEBI, and NPCI. Technology also plays a part in interactive videos. WhatsApp bots and voice-based learning in regional languages can help new insurance customers understand the basics. Insurers, the IRDAI, and industry groups should work together to develop standardised toolkits and training programmes for agents, fintech partners, and community influencers. Finally, enhancing literacy not only boosts uptake but also fosters trust, decreases fraud, and improves claim outcomes, benefiting all stakeholders in the ecosystem.