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HEALTH INSURANCE

Average health cover rises 31% post-GST removal; unlimited health plans, multi-year policies gain traction in 2025

Higher cover sizes post GST removal
*  Average sum insured increased from Rs.14.5 lakh (pre-GST) to Rs.19 lakh (post-GST), a 31% rise.

*  Policies with higher sum insured recorded increased selection following GST removal.

Health insurance uptick post-GST reforms

*  Rs.10–25 lakh covers increased by 47%, while Rs.25 lakh and above covers rose by 85%. Policies with sum insured below Rs.10 lakh declined by 24% post GST.

Multi-year policy sees higher uptake post GST exemption

*  Buyers increasingly opted for longer protection periods, reflected in the higher selection of 4-year and 5-year health insurance policies.

*  4-year and 5-year tenures increased by 56% and 62%, respectively.

Unlimited health plans gain share

*  Unlimited health plans accounted for  15.7% in 2025 which was around 2% of eligible purchases in 2024.

Sum insured shift: 2024 vs 2025

*  Policies with sum insured below Rs.10 lakh declined by 29% year-on-year.

*  Rs.10–25 lakh covers increased by 55.6%, while Rs.25 lakh and above rose by 49.3%.

Age profile of buyers (2025)

*  18–35 years accounted for 30% of purchases.

*  35–45 years formed 26%, followed by 46–60 years at 23% and 61+ at 21%.

Tier-wise city split

*  Tier 3 cities increased their share from 63.5% in 2024 to 70% in 2025.

*  Tier 2 cities rose marginally from 13.8% to 14.3%, while Tier 1 cities declined from 22.7% to 15.7%.

Top cities by bookings

*  Delhi and Bengaluru led purchases, followed by Hyderabad, Pune and Mumbai this year.

Top claim reasons

*  Heart-related conditions, cancer and cataract remained among the most common claim triggers.

*  Seasonal/ infectious illnesses were high, day-care procedures and accidental injuries also featured prominently.

NRI demand across regions

*  USA & Canada recorded a 157% year-on-year increase by NRI customers, followed by Europe at 153%.

*  GCC bookings rose by 114%, while overall NRI bookings grew by 125%.

Add-on selection trends

*  Day 1 cover increased from 73% in 2024 to 81% in 2025.

*  Renewal bonus rose from 68% to 73%, while OPD rider adoption increased from 20% to 24%.

TERM INSURANCE

Term insurance sees 37% growth in 2025 led by younger age groups; Rs.1 crore cover dominates buyer choice

Young buyers drive demand

*  Buyers aged 25-40 years accounted for the highest share of term insurance purchases in 2025.

*  Other age groups contributed smaller but steady volumes, indicating broad-based participation across life stages.

Rs.1 crore leads, higher covers on the rise

*  Rs.1 crore emerged as the most preferred sum assured by the number of policies purchased.

*  Rs.2 crore and above covers saw an increased adoption, indicating a gradual shift towards higher protection levels.

Tenure preferences: Covers till 60 & 70

*  Covertill ages 60 and 70 were the most frequently chosen options, and formed the core tenure selections.

Buyer profiles

*  Salaried individuals accounted for 70% of term insurance purchases.

*  Self-employed buyers formed 22%, while homemakers accounted for 8%.

Physical medical still rule

*  Physical medical tests remained the preferred mode for most customers as part of the underwriting process.

*  Video medicals only accounted for 15% of purchases, largely among NRI customers.

Men Vs women: Market share and choice of riders

*  Men accounted for 80% of term insurance purchases, while women accounted for 20%.

*  Women showed higher selection of Critical Illness riders, while men more frequently opted for Accidental Death, Disability and Waiver of Premium riders.

Motor Insurance

How India rethought motor insurance in FY26: EV booms, smarter covers, and the rise of Pay-as -you-drive

*  This year EV led the growth story:EVs are no longer a niche segment, they are becoming a high-value, fast-scaling category with distinct insurance needs and higher ticket sizes.

*  Data Insights: New EV motor insurance purchases grew nearly 2.5x YoY, with premiums surging ~200%, far outpacing petrol and diesel vehicles (sub-10% purchase growth; ~30% premium growth). This data reflects both, higher EV adoption and higher average ticket size.

*  Protection-first buying behaviour emerges in FY26:Our data highlights a clear shift, from insurance as a mandatory purchase to insurance as an active risk protection product.

*  Data Insights: Add-ons saw strong uptake, led by Roadside Assistance 74% and Zero Depreciation 60%. Engine Protector, Consumables, and Key/Lock Replacement saw moderate adoption at around 25% each, while Return to Invoice (RTI) had a lower overall uptake of 12%.

*  Policybazaar Data Reveals a Sharp Rise in Add-On Attachment Rates for Brand-New Vehicles

*  Data Insights: Attachment rates for add-ons are significantly higher forbrand-new vehicles, led by Zero Depreciation (96%) and Roadside Assistance (83%), followed by Consumables (74%), Return to Invoice (67%), and Engine Protector (61%), highlighting a strong preference for comprehensive, protection-led coverage.

*  In FY26, Maharashtra recorded the highest demand for motor insurance during the year, followed by Uttar Pradesh and Delhi

*  SUVs dominated new car insurance choices throughout FY26. Customer preference continued to shift towards feature-rich SUVs and compact utility vehicles.

*  Data Insights: Models such as Tata Nexon, Mahindra XUV 3XO, Mahindra XUV700, Hyundai Creta, and Tata Punch featured prominently among newly insured vehicles. (Footnote I)

*  Pay-As-You-Drive gained mainstream acceptance in FY26.Usage-linked insurance moved from experimentation to meaningful adoption, particularly among urban, low-mileage drivers.

*  Data Insights: Around 15–20% of customers opted for Pay-As-You-Drive (PAYD) policies, declaring average annual usage of 7,500–8,500 km and achieving 25–30% savings compared to standard comprehensive plans.

*  I) Top vehicle models insured in 2025

2 Wheeler: Honda Activa, TVS Jupiter, Hero Splendor Plus, Royal Enfield Classic, Suzuki Access, Honda CB Shine, Honda Dio, Bajaj Pulsar 150, Hero HF Deluxe, TVS Apache.

4 Wheeler:  (i) Overall:Maruti Wagon R, MarutiBaleno, Maruti Swift, Tata Nexon, Hyundai i20.These models reflect continued dominance of high-volume hatchbacks and compact SUVs in India's insured vehicle base.

(ii) Brand New: Tata Nexon, Mahindra XUV 3XO, Mahindra XUV700, Hyundai Creta, Tata Punch. New car purchases showed a clear tilt towards SUVs and feature-rich compact vehicles.

Travel Insurance 

2025: The year travel insurance became an essential from optional with higher covers

International travel hotspots

*  This year Germany emerged as top driver, followed closely by Thailand reflecting a mix of Schengen visa requirements and high-volume leisure trips to Southeast Asia.

Travellers’ upsize to high-limit protection

*  USD 250,000 -Travellers preferred sum insured USD 250,000 cover for Africa, Asia, Japan, Europe and trips worldwide.

*  USD 500,000- Travellers are opting for a much higher cushion for US and Canada, as healthcare costs are significantly higher.

Demographics: The rise of the 'senior voyager'

*  In 2025, senior citizens emerged as a significant growth driver (15%) of all insured travellers, while student travel insurance holds 1% niche but steady segment driven by long-stay education requirements.

*  Individual travel policies dominated with 75% share; family policies formed the rest.

2025 Trend: 15% Growth in Travel Protection

*  AnnualSurge: Travel insurance policy issuance grew by 15% Y-O-Y. This reflects the transition of insurance into a travel essential.

*  Month wise: May saw the highest travel insurance purchases, followed by April coinciding with summer vacations and early international leisure bookings

Reality of claims -Medical vs. Baggage

*  By ticket size: Medical claims continue to account for the highest claim value, reflecting the high cost of overseas healthcare

*  By number of incidents: Baggage loss, delays and trip-related claims were the most frequent, highlighting travel disruptions remain the most common pain point for travellers.

Investment

The 2025 Wealth Shift: Millennials Lead as Retirement Planning Hits the Early Button

Millennials: The investment engine

*  Primary Investors: This year, nearly 50% of all investment purchases come from investors in the age group 31-40 years, as they are the powerhouse driving investment sector (ULIP, GRP- Guaranteed return plan, and Pension products).

*  Secondary Investors: The 23-30 and 41-50 groups contribute a balanced 20-25% each, showing that while millennials lead, there is a healthy mix of participation from both entry-level professionals and mid-career veterans.

Retirement revolution: Planning hits the Early button

*  Last year, retirement products were dominated by the 35+ demographic. The once-surprising 90% share held by those over 35 has cooled to 75%. This translates to investors under 35years now accounting for 1 in every 4 retirement plans sold.

*  Insight: Investors under 35 have effectively tripled their footprint in the retirement space (from 10% to 25% share), reflecting the rise of the FIRE (Financial Independence, Retire Early) mind set among India’s youngest professionals.

Commitment to the Long Game: The Rise of the 20-Year Investor

*  The 20-Year Club: 8 out of 10 Guaranteed return plan buyers are opting for 20+ year tenures. This reflects that investors are prioritizing peace of mind and compound growth over quick returns. GRP act as immunity from market fluctuations.

Market Context: From Explosive Growth to Enduring Stability
*  FY2024-2025: Last year experienced a massive 100% YoY growth.

*  FY2025-2026: Holding steady levels on a YTD (year to date) basis, reflects that the insurance and investment market has successfully retained the surge of new investors.

The "Inclusion Gap"
*  GenderDivide: Men still account for 80% of purchases; the gap is even wider in Tier 2 and Tier 3 cities highlighting an urgent need for products designed for women.

*  Urban-Rural Divide: Tier 1 cities contribute almost 50% of all new premiums, showing high financial literacy while the next wave of growth must come from investors and Tier 2 and 3 town. 

Payments

How India Paid for Insurance in 2025

UPI becomes the default payment rail for insurance purchases this year

*  UPI has firmly established itself as the preferred payment mode for insurance buyers, accounting for 64.3 percent of all premium payments across categories.

*  Cards continue to play a meaningful role, with credit cards at 18.42 percent and debit cards at 8.68 percent, while net banking contributes 7.25 percent.

Subscription behaviour mirrors product maturity

*  Payment frequency varies sharply by product category, reflecting how Indian consumers view insurance commitments this year. In life insurance, monthly payments dominate at 94 percent, while annual payments account for only around 5 percent.

*  Health insurance shows a more balanced behaviour, with 61 percent opting for annual payments, and 35 percent choosing monthly, signalling growing comfort with both lump-sum and subscription models.

*  In general insurance excluding health, annual payments continue to be the norm at 100 percent, driven by short-tenure, event-based covers.

*  These splits are based on platform-level experience and observed customer behaviour patterns.

UPI Autopay and BNPL see strong first-time adoption this year

*  New-age payment mechanisms gained meaningful traction over the past year. UPI Autopay recorded around 1.5 million new registrations, highlighting growing trust in automated, mandate-based premium payments.

*  In parallel, approximately 5 lakh customers used BNPL options to pay for their policy premiums, indicating rising demand for short-term liquidity support without traditional credit friction.

Policy purchases spike around regulatory and festive triggers this year

*  Following the GST exemption, insurance purchases increased by 14.13 percent on a week-on-week basis, reflecting immediate consumer response to regulatory relief.

*  During the Navratri–Diwali festive period, insurance transactions jumped by 35.4 percent year-on-year, reinforcing the role of festivals as key financial decision-making moments, alongside traditional tax-planning months.

What this signals

*  The data points to a clear shift towards real-time, low-friction, and automated payments, with UPI at the centre of India’s insurance payment stack.

*  As consumers increasingly treat insurance as a recurring financial service rather than a one-time purchase, payment infrastructure is becoming as critical as product design itself.

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