Underinsurance Concerns in India
A recent survey by Bajaj Allianz Life Insurance, conducted with NielsenIQ, reveals a significant gap in life insurance coverage in India, despite a trend of younger individuals securing policies earlier. The ‘Underinsurance Survey 2025’ indicates that while the average age of first-time buyers has dropped from 33 to 28, many Indians remain underinsured. This leaves a substantial portion of the population with financial protection far below the recommended level.
Key Findings and Trends
The survey highlights several key trends in the Indian life insurance landscape.
- Age of First-Time Buyers: The average age of first-time life insurance buyers has decreased from 33 to 28 years.
- Drivers of Adoption: Family responsibilities, income levels, and health concerns are the primary factors driving insurance adoption.
- Coverage Perception vs. Reality: A considerable gap exists between perceived and actual coverage. Respondents believed their coverage was, on average, 6.4 times their income, but the actual coverage averaged only 3.1 times.
- Lack of Coverage Reviews: More than one in three Indians have never reviewed their life insurance coverage, even after major life events. This figure climbs to 43% among self-employed and affluent individuals.
- Confidence in Coverage: The age group of 46-50, which historically purchased policies at age 33, expresses low confidence in their sum assured, reflecting ongoing uncertainty about coverage adequacy.
- Key Factors: Family responsibilities, higher income, and health concerns are the top three considerations when deciding on the life insurance coverage.
- Information Sources: 46% of Indians rely on personal research for life insurance decisions.
The Protection Gap and Its Implications
Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, noted the significant protection gap in India. “India, despite being one of the world’s fastest-growing economies, has a total sum assured at just 70% of GDP—significantly lower than countries like the US (251%), Thailand (143%), and Malaysia (153%), highlighting a critical protection gap,” he stated. This shortfall can leave families financially vulnerable, forcing them to rely on savings or liquidate assets during a crisis.
The study highlights that in urban areas, the average life cover stood at 3.1 times annual income, dropping to 2.9 times for Mass Affluent and Affluent families respectively.
Adequacy and Recommendations
The survey underscores the need for a reassessment of life insurance coverage. Chugh emphasized the importance of a holistic assessment considering income, liabilities, and future aspirations. He recommended a minimum life cover of at least 10 times one’s annual income stating, “To truly safeguard one’s loved ones, it’s essential to… ensure financial security when it matters most.”
Conclusion
The findings of the Bajaj Allianz Life Insurance survey emphasize the need for increased awareness and better understanding of life insurance coverage in India. While awareness is growing, addressing misconceptions about adequate coverage remains crucial to protect families from financial vulnerability.
