Nearly half of Indians still unaware of term insurance, reveals Policybazaar Report
Health insurance has now emerged as one of the top three ‘must-have’ financial products for 28.3% of respondents, ranking alongside traditional instruments like gold, real estate and fixed deposits.
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47.6% of Indians remain unaware of term insurance and its benefits**, despite a notable industry-wide growth of 18% in FY24, reveals Policybazaar.com's second edition of consumer insights report, How India Buys Insurance 2.0. This lack of awareness continues to be a major barrier to widespread adoption, even as financial uncertainties grow.
As per the report, health insurance has now emerged as one of the top three ‘must-have’ financial products for 28.3% of respondents, ranking alongside traditional instruments like gold, real estate and fixed deposits. Yet, despite this growing importance, the majority of Indians remain severely underinsured.
Interestingly, 75% of health insurance buyers have coverage of Rs 10 lakh or less, with South India leading the trend, while 66% of policyholders in the region opt for Rs 5 lakh coverage or below. This is in sharp contrast to the skyrocketing cost of critical illness treatments such as cancer or cardiac surgery, many of which exceed Rs 10 lakh in real-world scenarios.
Sarbvir Singh, Joint Group CEO, PB Fintech, said, "This year's report puts a spotlight on the awareness gap even more evidently than before. A large proportion of consumers plan to sell ancestral assets or borrow money during a crisis rather than opt for simple, accessible solutions like health and life insurance to protect their families. As an industry, it's imperative that we strengthen awareness and improve the overall customer experience to drive broader adoption and ensure financial security for all.”
The findings underscore a dangerous gap in financial preparedness. Among those who haven’t purchased health insurance, 51% believe major medical treatments cost under Rs 5 lakh, revealing a serious underestimation of healthcare inflation.
The report also highlights a critical knowledge gap in life coverage needs. Among Indians who have not purchased term insurance, 87% underestimate their family’s long-term financial requirements, often failing to factor in key future expenses such as education, medical emergencies, spousal support, and debt obligations. The report suggests that experts typically recommend life insurance cover of 15–20 times one’s annual income, yet only 13% of non-buyers align with this benchmark.
The awareness gap remains one of the biggest barriers to term insurance adoption in India. The survey found that 47.6% of Indians are unaware of term insurance and its benefits. However, there are signs of improvement. Industry-wide, term insurance grew by 18% in FY24, compared to a CAGR of just 2% over the past five years.
Despite these challenges, the report notes a shift in sentiment. 56% of respondents who are aware of term insurance express a positive attitude toward purchasing it in the future, signaling a window of opportunity for insurers and financial educators.
