Decoding the Decline in Life Insurance Penetration in India

When was the last time you thought about getting a life insurance policy? If your answer is “I will get to it someday”, you are not alone. Despite India growing as one of the fastest expanding economies, life insurance penetration across the nation has remained surprisingly low. Life insurance penetration fell slightly to 2.8% in FY24, down from 3% in the previous year.

While we happily upgrade our smartphones, invest in the latest gadgets, and book fancy overseas vacations, securing our financial future often takes a backseat. So, what has caused this curious case of life insurance avoidance? Let’s go over the reasons.

Why is Life Insurance Overlooked in India?

Ideally, life insurance coverage is something that everyone should have, but somehow, it slips through the cracks of our everyday life. A few reasons for this are:

Perception Problem: In India, life insurance still carries the old-school image of being relevant only after a certain age. If you are young, independent and seemingly invincible, it is easy to think you don’t need it.
Complicated Jargon: Let’s be honest – the world of insurance can sound like we have entered a different universe. Terms like sum assured, life insurance premium, maturity benefit, and add-ons can scare off people who are looking to get insured.
Myths Regarding Affordability: Many individuals think life insurance premiums are too expensive. In reality, a basic term insurance policy can be surprisingly affordable, especially when you are young.
Procrastination Culture: “I’ll get it next month when I have money to spare” often turns into “maybe next year,” and before you know it, life gets busy and the decision gets shelved.

Why It Matters More Than Ever?

What makes life insurance such an important part of your financial plan? It is not just about having peace of mind for yourself — it’s about ensuring your loved ones stay financially protected if life throws an unexpected curveball. Whether it is paying off pending loans or managing ongoing household expenses, a good term insurance policy steps in when your family needs support the most.

And it’s no longer just about providing a lump sum in tough times. Many term insurance plans today come packed with extra benefits like premium return options, critical illness coverage, disability protection, and retirement savings features. With healthcare costs climbing and financial markets staying unpredictable, having a solid policy in place has quietly shifted from a “nice-to-have” to a “must-have.”

Conclusion

At the end of the day, you need to understand that life insurance coverage is not a luxury – it is a necessity for people around the nation. There’s a common misunderstanding that life insurance is just for married people with kids or people over the age of 50 nearing retirement. If you have people depending on your income to maintain their daily lifestyle, a solid term insurance policy should be on your radar.

So, whether you have landed your first job or are looking to add a new member to your family, take a minute today and check out your insurance options. Compare plans, crunch those life insurance premium numbers, and pick a policy that fits your lifestyle. However, if you still need help to decide, you can connect with the experts at Paybima, and someone will be able to help with you the same. Because let’s face it – while we cannot predict the future, we can definitely be prepared for it.

Disclaimer: This content is only for educational/ informational purposes. It does not make any recommendation. You need to choose the best plan according to your needs.

Author Bio

Paybima Team

Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 21 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

Choose from India’s top insurers

Other Life Insurance Products

Term plan

Saral Jeevan Bima

Guaranteed Returns Plan

Latest Post

How to Choose the Best Bike Insurance Policy for Your Needs

Having a bike is not just about convenience, it’s a huge responsibility. Financial protection of your two-wheeler is important and the best way to ensure that is to have a bike insurance policy that will protect you in case of an accident, theft or a natural calamity. There are so many options when it comes to policies, making it difficult to know what’s best. This guide makes it easier to choose the best bike insurance policy that is suitable for you.

See now

Non-Linked and Non-Participating Term Insurance Plans

Non-linked, non-participating term plans are the ones that do not participate in the business and profit of the insurance company. These are fixed premium plans where the policyholder pays a fixed amount to ascertain a guaranteed sum as a return to be paid to the nominee in case of his/ her demise. Let’s learn more in this post.

See now

How depreciation is calculated for the purpose of claims

Car depreciation implies the difference between the cost of a car at the time of buying the car and when you sell it. A car insurance claim amount is determined by the car depreciation rate. The car depreciation rate is the reduction in the value of your car over its lifespan caused by wear and tear.

See now

Best Savings Plans for Girl Child to Ensure Financial Security

Have you ever caught yourself lost in illusions about your daughter's future events, such as her university convocation and first day at work? Her university convocation. When she embarks upon her initial job after graduation will be the day.

See now

How to Claim Car Insurance for Own Damage

Accidents can happen anywhere, anytime, by your own fault or another person. What’s important is to be prepared for such mishaps. This is where Own Damage Car Insurance comes in handy.

See now