New Delhi, 25 March 2025: Bajaj Allianz Life Insurance, one of India’s leading private life insurers, has released a comprehensive study titled ‘Underinsurance Survey 2025’, conducted in collaboration with NielsenIQ. The survey covered 2,000 individuals across metro, tier 1, and tier 2 cities, assessing life insurance coverage levels and identifying gaps in financial protection. The findings highlight the current state of life insurance in India and the key factors influencing purchasing decisions.
The survey reveals a significant shift in life insurance trends, with the average age of first-time buyers dropping from 33 to 28 years. Family responsibilities, income levels, and health concerns emerged as key drivers for insurance adoption. Notably, 81% of respondents believed that life insurance coverage of less than 10 times their annual income was sufficient for financial security. However, the actual coverage figures tell a different story—in urban areas, the average life cover stood at 3.1X times annual income, dropping to 2.9 times for Mass Affluent and Affluent families respectively.
Speaking on the survey findings, Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance, said, 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. This shortfall can leave families financially vulnerable, forcing them to dip into savings or liquidate assets in times of crisis, which can derail their life goals. To truly safeguard one’s loved ones, it’s essential to assess coverage needs holistically—factoring in income, liabilities, and future aspirations. A simple rule of thumb is to have life cover at least 10 times one’s annual income, ensuring financial security when it matters most.
“Our Underinsurance Survey 2025 highlights this gap. Along with IRDAI and the industry, we will continue to take firmer steps to drive awareness, enhance product transparency, and improve accessibility. A robust digital and tech-enabled service ecosystem will be key in bridging this gap. Together, we can move closer to achieving the vision of ‘Insurance for All by 2047”
Key Findings of the Survey
- Perception vs. Reality: Indians believed they had coverage of 6.4 times their income, but the actual coverage averaged just 3.1 times, highlighting a major gap in financial preparedness.
- Lack of coverage reviews: Over one in three Indians have never reviewed their life insurance coverage, even after major life events. This number rises to 43% among self-employed and affluent individuals, putting them at higher risk of underinsurance.
- Confidence in coverage: While younger individuals are purchasing insurance earlier, the 46-50 age group, which typically bought policies at age 33, expressed low confidence in their sum assured, reflecting ongoing uncertainty about coverage adequacy.
- Key factors for determining coverage: Family responsibilities, higher income, and health concerns were the top three considerations for individuals when deciding on life insurance coverage.
- Source of information: 46% of Indians rely on personal research for life insurance decisions, emphasizing a preference for self-directed learning. However, major life events are often overlooked when reassessing coverage needs.
The findings underscore a critical gap in life insurance awareness and adequacy in India. While more people are recognizing the importance of life insurance, misconceptions about required coverage persist, leaving many underinsured. Many find the concept of adequate life insurance coverage complex or struggle to grasp its importance. Bajaj Allianz Life has been focused on simplifying this, making it a routine part of household financial planning. The key is to determine the right coverage by assessing one’s income, savings, liabilities, and family needs. The general rule-of-thumb is to secure cover that is 10 times one’s annual income. This will keep the policyholder’s family financially well supported in the event of his/her death.
