Indias Insurance Gap: In a country witnessing rapid economic growth, rising healthcare costs, and increasing financial complexity, insurance should be a critical safety net. Yet, the recently published Suraksha Kavach Report 2025 by Bajaj Capital Insurance Broking Ltd. reveals a stark truth — while awareness is at an all-time high, most Indians remain dangerously underinsured. The study, released on Insurance Awareness Day, sheds light on how this gap varies across demographics, age groups, and income brackets, raising an urgent call for better financial protection.
The report warns that existing coverage is inadequate to cover life’s unpredictabilities — from a major hospital bill to sudden income loss. Medical inflation is outpacing policy payouts, and asset growth is outstripping insurance limits. Alarmingly, 61% of urban households could face financial instability from a single medical emergency. While more people are aware of insurance than ever before, the average term insurance plan falls short by 30–50% compared to the policyholder’s real financial need. This underinsurance is more pronounced in vulnerable groups such as women and Gen Z youth.
Women, despite their growing contributions to household income, remain under-protected. Only 1 in 5 working women own a life insurance policy, and in many households, insurance decisions are made by male family members, often sidelining female participation. Furthermore, a lack of policy literature in regional languages and complex terms and conditions deter many women from purchasing coverage. Young Indians, too, are actively investing in SIPs and trading stocks, but insurance doesn’t rank high on their priority list. Around 64% of Gen Z individuals research insurance, yet only 41% go on to buy a policy, citing confusing policies and high premiums.
Who Can Apply for Insurance in India?
Insurance products in India cater to a wide range of individuals across various age, income, and occupation categories. Eligibility typically includes:
For Life Insurance
- Indian citizens aged between 18 to 65 years
- Salaried or self-employed individuals
- NRIs (Non-Resident Indians) depending on the insurer’s policy
For Health Insurance
- Individuals between 3 months to 65 years (some plans offer senior citizen cover up to 75+)
- Family floaters available for families (2 adults + 2 children)
- Group health insurance for corporate employees
Also read: Fires and Gas Explosions at Home: What’s Covered Under Insurance and What’s Not
Insurance Fees and Premiums: What Does It Cost?
Insurance premiums in India vary based on age, sum insured, pre-existing health conditions, and type of insurance plan.
| Insurance Type | Typical Annual Premium (Approx.) | Sum Assured Range |
|---|---|---|
| Term Life Insurance | ₹4,000 – ₹20,000 | ₹50 lakh – ₹1 crore+ |
| Health Insurance | ₹7,000 – ₹25,000 | ₹5 lakh – ₹1 crore |
| ULIPs/Endowment Plans | ₹15,000 – ₹50,000 | Market-linked or fixed |
| Group Insurance | Often covered by employer | ₹3 lakh – ₹10 lakh |
How to Use Insurance Effectively
Insurance is not just a policy; it’s a financial strategy. Here’s how to make the most of your insurance plan:
- Buy Early: Lock in low premiums and ensure lifelong coverage.
- Review Sum Insured Annually: Upgrade as income and liabilities grow.
- Understand Exclusions: Know what’s not covered to avoid claim shocks.
- Use Riders: Add riders for critical illness, accident cover, or waiver of premium.
- Keep Nominees Updated: Ensure family members are informed and legally nominated.
Benefits of Adequate Insurance Coverage
- Financial Security for families in case of untimely death or critical illness
- Peace of Mind during medical emergencies without draining savings
- Tax Benefits under Sections 80C and 80D of the Income Tax Act
- Better Loan Eligibility as insured individuals are considered lower risk
- Encourages Savings when invested via endowment or ULIP plans
How to Apply for Insurance in India
Step-by-Step Application Process:
- Research Insurance Needs – Calculate your Human Life Value (HLV).
- Choose the Right Insurer – Compare policies on aggregator platforms.
- Fill Proposal Form – Provide accurate personal, health, and nominee details.
- Undergo Medical Tests (if required) Income Tax Benefits on Insurance
- Pay the Premium – Choose annual/monthly/quarterly frequency.
- Receive Policy Document – Verify the policy schedule, riders, exclusions.
Many insurers also offer online policy issuance for ease and faster processing.
Important Dates to Remember
| Event | Date |
|---|---|
| Insurance Awareness Day | June 28, 2025 |
| Suraksha Kavach Report Release | June 28, 2025 |
| Best Time to Buy Insurance | Start of Financial Year (April) |
| Tax Saving Deadline | March 31 (every year) |
Disclaimer
This article is intended for informational purposes only. Insurance policies are subject to terms, conditions, exclusions, and eligibility criteria defined by insurers and regulated by the IRDAI (Insurance Regulatory and Development Authority of India). Readers are advised to read policy documents carefully and consult licensed financial advisors before purchasing any insurance product.
Indias Insurance Gap Conclusion
Despite improved access and awareness, India’s insurance landscape remains insufficient in practice. This underinsurance poses a major risk, especially as medical expenses and financial volatility rise. While initiatives like the Suraksha Kavach Report 2025 are shedding light on the issue, awareness must now be translated into action.
Insurers, policymakers, and consumers need to work together to make insurance more inclusive, transparent, and accessible. For example, offering simpler policies in regional languages could encourage more women and rural populations to get covered. Likewise, employers should educate employees about upgrading group covers to individual plans for long-term protection.
For high-income individuals, the report is a wake-up call. Relying solely on employer-provided or basic life insurance can be financially reckless in the face of evolving responsibilities, lifestyle changes, and asset accumulation. Wealth without adequate risk cover is a fragile financial plan.
Ultimately, insurance is not a luxury — it’s a necessity. It’s time we stopped delaying decisions that could protect our families, preserve our assets, and offer us peace of mind in times of crisis. As Venkatesh Naidu, CEO of Bajaj Capital Insurance Broking Ltd., rightly said: “We are aware, but we still delay. We are covered, but not adequately.”
Indias Insurance Gap FAQs
1. Why are most Indians underinsured despite increased awareness?
While awareness campaigns and online tools have improved public knowledge about insurance, actual purchase behavior remains low. Many Indians delay decisions, underestimate risks, or buy minimal coverage due to affordability concerns or lack of understanding.
2. How much insurance coverage should one ideally have?
Experts recommend term life coverage of at least 10–15 times your annual income, and health insurance of ₹10–25 lakhs per individual, especially in urban areas. Human Life Value (HLV) calculators help estimate the right coverage based on financial obligations, goals, and dependents.
3. Can women and homemakers apply for insurance independently?
Yes. Working women, homemakers, and even senior citizens are eligible for various insurance policies. However, many face barriers like policy jargon, male-dominated decision-making, or lack of localized communication. Insurers are now increasingly offering women-centric products and simplified application processes.
4. Does group health insurance from my employer offer enough protection?
No, not usually. Group health insurance covers are often basic and limited in sum insured. They may not offer portability, critical illness cover, or benefits after employment ends. It’s advisable to supplement with a personal health policy.
5. What is the best age to buy life or health insurance in India?
The earlier, the better. Buying insurance in your 20s or early 30s ensures low premiums, better policy choices, and long-term savings. Waiting till middle age or post-retirement can drastically increase costs and limit benefits.
