Survey Highlights Underinsurance Concerns in India
A recent survey conducted by Bajaj Allianz Life Insurance in partnership with NielsenIQ has revealed a notable discrepancy in how Indians perceive and approach life insurance coverage.
The Underinsurance Survey 2025 found that a significant 81% of Indians believe that life insurance coverage equivalent to less than 10 times their annual income is sufficient for financial security. However, the reality paints a different picture. The average life insurance coverage held by individuals in India is only 3.1 times their income, falling well short of the industry-recommended benchmark.
The survey reveals a concerning trend of relying on personal research when making life insurance decisions.
This underestimation points to a potential financial protection gap. The findings indicate that a substantial portion of the population may be inadequately insured. This could leave families exposed to financial instability in the face of unforeseen events. The discrepancy also raises questions about the general awareness of life insurance as a critical tool in financial planning.
Life insurance serves as a financial safety net, providing crucial support during income loss due to unexpected circumstances. The prevailing belief that coverage under ten times one’s annual income is enough could lead to financial hardships if the insurance payout is insufficient to meet future expenses, debts, and financial goals.
Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, emphasized the issue, noting that India’s sum assured amounts to only 70% of its GDP. This is significantly lower when compared to other countries. The US has 251%, Thailand 143%, and Malaysia 153%. Chugh highlighted that this disparity may force families to tap into savings or liquidate assets during financial emergencies, potentially disrupting long-term financial plans.
Understanding life insurance policies thoroughly is essential due to their complexity and variation. Consumers must carefully evaluate their financial needs, taking into account factors such as inflation, lifestyle, and future financial obligations, to determine the appropriate level of life insurance coverage. This comprehensive assessment ensures that policyholders adequately safeguard their families’ financial well-being.
The survey underscores an industry-wide need for enhanced consumer education across the insurance sector. By focusing on consumer education and awareness, companies can help improve individual financial security and strengthen consumer trust and confidence in life insurance products.
