Insurance Sector Will Gain From A Robust Digital And Tech-Enabled Ecosystem

The average age of first-time buyers has dropped from 33 to 28 years. And this significant shift in life insurance trends in India is not without a reason. Family responsibilities, income levels, and health concerns emerged as key drivers for insurance adoption. A recent study by Bajaj Allianz Life Insurance and NielsenIQ, suggests that as high as 81 per cent of respondents believed that life insurance coverage of less than 10 times their annual income was sufficient for financial security.

However, the actual coverage figures tell a different story—in urban areas, the average life cover stood at 3.1X times annual income, dropping to 2.9 times for mass affluent and affluent families, respectively. India, despite being one of the world’s fastest-growing economies, has a total sum assured at just 70 per cent of GDP—significantly lower than countries like the US (251 per cent), Thailand (143 per cent), and Malaysia (153 per cent), highlighting a critical protection gap.

This shortfall can leave families financially vulnerable, forcing them to dip into savings or liquidate assets in times of crisis, which can derail their life goals. In order to truly safeguard one’s loved ones, it’s essential to assess coverage needs holistically—factoring in income, liabilities, and future aspirations. A simple rule of the thumb is to have life cover at least 10 times one’s annual income, ensuring financial security when it matters most. Interestingly, the Underinsurance Survey 2025 done by Bajaj Allianz Life Insurance and NielsenIQ, highlights this gap.

Along with IRDAI and the industry, all stakeholders of the sector will have to continue to take firmer steps to drive awareness, enhance product transparency, and improve accessibility. A robust digital and tech-enabled service ecosystem will be the key in bridging this gap. Together, the insurance sector in the country can move closer to achieving the vision of ‘Insurance for All by 2047”.

Other key findings of the survey include: Perception vs. reality: Indians believed that they had coverage of 6.4 times their income, but the actual coverage averaged just 3.1 times, highlighting a major gap in financial preparedness; Lack of coverage reviews: Over one in three Indians have never reviewed their life insurance coverage, even after major life events. This number rises to 43 per cent among self-employed and affluent individuals, putting them at higher risk of underinsurance; Confidence in coverage: While younger individuals are purchasing insurance earlier, the 46-50 age group, which typically bought policies at age 33, expressed low confidence in their sum assured, reflecting ongoing uncertainty about coverage adequacy; Source of information: Around 46 per cent of Indians rely on personal research for life insurance decisions, emphasizing a preference for self-directed learning. However, major life events are often overlooked when reassessing coverage needs.

Sector analysts point out that the findings underscore a critical gap in life insurance awareness and adequacy in India. While more people are recognizing the importance of life insurance, misconceptions about required coverage persist, leaving many underinsured. Many find the concept of adequate life insurance coverage complex or struggle to grasp its importance. Interestingly, other than metro cities and tier-I cities, the study was also conducted in tier-II cities and smaller towns.