Insurance Penetration Rises, but Indians Still Financially Exposed: India’s insurance landscape has undoubtedly evolved, with awareness and policy uptake on the rise. Yet, a new report—Suraksha Kavach Report 2025 by BajajCapital Insurance Broking Ltd.—uncovers a sobering contradiction. Despite increasing insurance penetration, a large majority of Indians remain financially vulnerable during real-world emergencies. While digital tools, government initiatives, and financial literacy campaigns have driven more Indians to consider insurance, actual coverage remains woefully inadequate. The report, released on Insurance Awareness Day (June 28), refers to this situation as the “insurance paradox.”
The paradox lies in increased knowledge but insufficient protection. According to the findings, 61% of urban Indian households could be financially destabilised by a single hospital bill. Even worse, most term life insurance policies cover only 50% to 70% of actual needs. The average policyholder assumes they are covered, only to discover massive shortfalls in times of need. The growing access to insurance platforms has failed to translate into holistic financial protection, leaving a wide gap between perceived safety and actual security.
According to Venkatesh Naidu, CEO of BajajCapital Insurance Broking Ltd., “India is insuring itself, but not fast enough to match the risks it’s facing.” The report highlights five major areas of concern: the Gen Z delay in insurance adoption, the severe underinsurance of women, an urban-rural awareness gap, widespread health coverage insufficiency, and the mismatch between rising incomes and stagnant insurance coverage levels. Let’s dive deeper into these findings and see what they mean for individuals across the country.
Findings from Suraksha Kavach Report 2025
1. Gen Z: Aware but Hesitant
India’s digitally empowered youth (ages 21–30) are financially literate but reluctant when it comes to insurance. Though 64% actively research policies online, only 41% have actually purchased insurance. Many cite high premiums, confusing product options, and the belief that “insurance can wait” as reasons for delaying. This delay leaves them unprotected against unexpected events like accidents or critical illnesses.
2. Women: Financially Active but Underinsured
Despite being primary earners or contributing members in households, only 1 in 5 working women own life insurance in their name. Many policies are bought for women, not by them, reflecting a lack of financial autonomy. Around 71% of women said they found insurance too complex, which indicates that the issue is not just awareness but empowerment.
3. Urban-Rural Divide
While urban areas are more aware of policies and top-ups, only 16% of rural policyholders independently purchase insurance. Most coverage comes from government schemes like PMJJBY or employer-driven benefits. Digital tools are still underused in rural areas due to language barriers, limited trust, and low digital literacy. Consequently, true financial empowerment remains elusive.
Who Can Apply for Insurance in India?
Anyone meeting the basic eligibility criteria set by insurers can apply for a life or health insurance policy. This includes:
- Individuals aged 18 to 65 years
- Salaried employees, self-employed, homemakers, and even students
- Rural and urban citizens (specific plans may vary)
- Those with pre-existing health conditions (subject to disclosures)
Policies are available both online and offline, with certain government schemes targeting BPL (Below Poverty Line) families, senior citizens, and unorganized sector workers.
Also read: Insurance Illusion: 79% of Indians Unsure What Their Policies Actually Cover – CoverSure Survey Reveals
Insurance Fees and Premiums
Life Insurance
- Term life policies range between ₹2,000–₹15,000 annually depending on age, coverage amount, and health profile.
- Premiums are lower when bought at a younger age.
Health Insurance
- Individual health plans start at ₹4,000/year and family floaters can cost ₹10,000–₹25,000/year.
- Top-up and critical illness add-ons increase the premium.
Government Schemes
- PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana): ₹330/year for ₹2 lakh cover.
- PMSBY (Pradhan Mantri Suraksha Bima Yojana): ₹12/year for accidental cover.
How to Use Insurance Effectively
- Assess Your Needs: Calculate ideal term cover using the “10x your annual income” rule.
- Choose Wisely: Compare plans across IRDAI-approved platforms.
- Add Riders: Include critical illness, disability, or accidental death riders.
- Update Nominees: Ensure nominee details are current to avoid claim issues.
- Renew Timely: Set up auto-debit or reminders for policy renewal.
How Insurance Benefits You
- Financial Stability: Avoid dipping into savings or loans during medical emergencies.
- Peace of Mind: Ensures your family’s well-being even if you’re not around.
- Tax Benefits: Under Section 80C, 80D and 10(10D) of the Income Tax Act.
- Medical Access: Cashless hospitalisation in a wide network of hospitals.
- Savings and Investment: ULIPs and endowment plans combine protection with wealth growth.
How to Apply for Insurance
- Online Mode
- Visit insurer’s website or comparison platforms like Policybazaar or Coverfox.
- Enter personal details, choose plan, pay premium online.
- Upload required documents (ID, address proof, income proof).
- Receive e-policy instantly.
- Offline Mode
- Approach a certified insurance agent or company office.
- Fill physical forms and submit documents.
- Premium payment via cheque or digital mode.
- Get physical policy within 7–10 working days.
Important Dates
- June 28, 2025: Release of Suraksha Kavach Report on National Insurance Awareness Day
- Policy Enrollment Periods:
- PMJJBY/PMSBY renewals: May–June annually
- New private policy enrollments: Open throughout the year
Disclaimer
The information provided in this article is for general awareness and educational purposes. Insurance products may differ based on the insurer, applicant profile, and regulatory updates. Always read the offer documents carefully before investing. The Suraksha Kavach Report 2025 findings are based on survey data and may not represent every individual case.
Insurance Penetration Rises, but Indians Still Financially Exposed Conclusion
The Suraksha Kavach Report 2025 sheds light on a critical issue: India is becoming more aware, but not necessarily better protected. The gap between knowing about insurance and actually using it wisely is wide. With the current pace, millions remain at risk of falling into financial ruin due to underinsurance or misinformed decisions. PMJJBY Government Scheme Details
It’s clear that policy literacy, especially among women and Gen Z, needs targeted improvement. Insurance must be simplified, demystified, and democratised. Tools like vernacular platforms, AI-driven recommendations, and guided onboarding can make insurance more accessible and less intimidating.
For rural India, a focused push towards agent training, digital inclusion, and scheme customization is essential. Providing meaningful cover—not just a policy document—is the need of the hour.
If India is to build a resilient financial future, bridging this protection gap is non-negotiable. Individuals must not only buy insurance but understand, evaluate, and personalise it according to life stages and financial goals.
Insurance Penetration Rises, but Indians Still Financially Exposed FAQs
1. What is the “insurance paradox” mentioned in the Suraksha Kavach Report?
The “insurance paradox” refers to the growing awareness and policy penetration in India, but with limited actual protection. People think they are covered but are often underinsured, especially for health or life emergencies.
2. Why are Gen Z Indians delaying insurance purchases?
Gen Z is digitally savvy and financially aware but often delays buying insurance due to high premiums, confusion over product types, and the belief that they are too young to need it immediately.
3. How can women improve their insurance coverage?
Women should actively research and buy policies themselves rather than relying on family. Choosing term plans, health insurance with maternity or critical illness cover, and seeking advice from unbiased platforms can help bridge the gap.
4. What government schemes are helping rural insurance penetration?
Schemes like PMJJBY, PMSBY, and Ayushman Bharat provide affordable coverage. However, the challenge lies in ensuring understanding and ownership rather than just enrollment through employers or agents.
5. What is the ideal insurance coverage for an average Indian household?
Experts recommend life cover of at least 10 times the annual income, and health cover of ₹10–15 lakhs for a family of four. Add-ons like critical illness or accidental riders further enhance financial security.
