Average Life Insurance Premium Jumps 43% in 5 Years as Indians Opt for Higher Cover
Average life insurance premiums are rising as policyholders choose higher coverage. The shift highlights changing insurance needs and greater demand for financial protection.
Life Insurance: Indians are opting for higher life insurance cover, pushing up the average premium per policy. The trend reflects a growing focus on stronger financial protection for families.
NEW DELHI – Life Insurance: August 14, 2026 The average annual life insurance premium paid per policy in India rose 42.6% between FY2021 and FY2025, from ₹15,567 to ₹22,195, according to an analysis of life insurance business data compiled by the Insurance Information Bureau (IIB) of India
The IIB analysis shows that while the total number of in-force life insurance policies remained broadly stable at around 343 million over the five-year period, the average premium per policy climbed steadily, indicating that existing policyholders are consistently investing more towards their financial protection.
The rise in average premium is linked to a broader shift towards higher-value cover. Between FY2021 and FY2025, higher sum assured categories witnessed consistent growth across all policy segments. The share of policies with a sum assured between ₹2 lakh and ₹5 lakh increased by 5.6 percentage points, while the ₹10 lakh–₹25 lakh category gained 2 percentage points.
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Life Insurance: Policies Above ₹50 Lakh Sum Assured Grow 68%
At the higher end of the spectrum, the number of policies with a sum assured exceeding ₹50 lakh grew 68%, from 4.4 million in FY2021 to 7.4 million in FY2025, generating an annual premium of ₹975 billion.
The data further shows that the share of in-force policies with a sum assured of ₹2 lakh or less declined from 65.1% in FY2021 to 53.6% in FY2025, while every higher sum assured category registered consistent growth over the same period.
Life Insurance: Industry Reaction
Mr. Kamlesh Rao, Chairperson, Insurance Awareness Committee (IAC)–Life, said: “The IIB data clearly demonstrates that Indians who stay invested in life insurance increasingly recognise its value and strengthen their protection as their lives and responsibilities evolve. It is encouraging to see policyholders consistently moving towards higher levels of insurance cover, reflecting a growing commitment to financial security for themselves and their families. For those who have not yet begun their life insurance journey, the message is simple—the earlier you start, the more time you have to build comprehensive financial protection that can grow alongside your aspirations and responsibilities.”
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Life Insurance: What’s Driving the Higher Premium Outlay
The press release attributes the shift towards higher coverage and premium outlay to several factors: growing awareness of the importance of life insurance, rising incomes, inflation, and evolving life stages and responsibilities. It also states that the Covid-19 pandemic and its aftermath highlighted protection gaps, prompting individuals to reassess their financial resilience, while insurers have introduced more tailored solutions catering to diverse customer needs.
IAC-Life said the trends underscore the importance of viewing life insurance as a lifelong financial companion rather than a one-time purchase, noting that beginning early enables individuals to secure protection at a younger age, benefit from lower premiums, and gradually enhance coverage as income, responsibilities and long-term financial goals grow. IAC-Life added that it will continue to leverage insights from the IIB study to design targeted awareness initiatives encouraging more Indians to begin their life insurance journey early.
About the Insurance Awareness Committee–Life
According to IAC-Life, 87% of India continues to grapple with a life insurance protection gap, which exceeds 90% among those aged 18–35. The Insurance Awareness Committee was formed in 2019 under the aegis of the Life Insurance Council, bringing together 25 life insurance companies under the guidance of six CEOs nominated to lead the agenda, supported by a cross-industry marketing team and creative/media agencies, to research, plan, create and deploy nationwide awareness campaigns.
