Life Insurance Coverage in India Sees Significant Growth Over the Last Decade

The number of individuals covered by life insurance in India has surged over the past ten years, rising from approximately 15 crore in FY15 to nearly 40 crore in FY25. This growth is primarily attributed to the rapid expansion of group and credit-linked insurance products, as per a recent report. The life insurance sector in India has shown consistent growth, with a compound annual growth rate of around 13 percent over the last two decades, according to the CareEdge ratings report.
The sector’s expansion has closely followed India’s economic growth trajectory, with the country’s GDP at market prices increasing at an average rate of about 12.4 percent during the same period. Factors contributing to this growth include a rising demand for group insurance, product innovation, personalized offerings, and enhanced distribution networks, particularly in individual insurance.
Despite the positive developments, India’s insurance market remains underpenetrated. Life insurance penetration in the country was only 2.8 percent in 2023, significantly lower than the approximately 5.6 percent average observed in developed economies. Additionally, insurance density in India stood at $70 in 2023, highlighting a substantial disparity between India and its global counterparts, as outlined in the report.
While more individuals are now covered by insurance, many policies still provide low sums assured. This results in key risks such as death protection and retirement income not being adequately addressed. The report emphasizes that the long-term impact of the sector will hinge on offering substantial protection and reliable pension products, rather than solely focusing on increasing the number of policyholders.
The insurance market in India remains highly concentrated, with the top five insurers controlling over 85 percent of the total premium income. Life insurance continues to hold a dominant position in India’s insurance landscape, contributing to nearly 74 percent of total premiums in FY25, a significant contrast to the global average of about 41 percent. Total life insurance premiums for the year amounted to Rs 8.85 lakh crore, according to the report.