81% Of Indians Underinsured: Survey Highlights Alarming Life Insurance Coverage Gap
The survey conducted by Bajaj Allianz Life Insurance in collaboration with NielsenIQ surveyed 2,000 individuals from metro, Tier-1, and Tier-2 cities.
A striking 81% of Indians underestimate their life insurance needs, believing that coverage below ten times their annual income is sufficient for financial security, according to the latest ‘Underinsurance Survey 2025’.
The survey was conducted by Bajaj Allianz Life Insurance in partnership with NielsenIQ, covering 2,000 people from metro, Tier-1, and Tier-2 cities.
Despite being one of the world's fastest-growing economies, India’s total sum assured stands at just 70% of its GDP. This is considerably lower than countries such as the US (251%), Thailand (143%), and Malaysia (153%), underscoring a significant protection gap, the survey showed.
The disparity underscored the urgent need for greater insurance penetration and awareness.
“This leaves families financially vulnerable, forcing them to dip into savings or liquidate assets in times of crisis. 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," said Tarun Chugh, Managing Director and CEO, Bajaj Allianz Life Insurance.
The survey showed that while life insurance adoption is increasing across India, financial awareness regarding adequate coverage remains low.
The average age of first-time life insurance buyers has dropped from 28 years to 33 years previously, the survey mentioned.
Key drivers for purchasing insurance include family responsibilities, rising income levels and health concerns.
While policy adoption is on the rise, the actual life cover held by individuals averages just 3.1 times their income, in stark contrast to the industry-recommended benchmark of 10 times.
Key Takeaways Of Underinsurance Survey 2025
One in three policyholders has never reassessed their life insurance coverage, even after key life changes such as marriage, having children, or receiving a salary increase.
Self-employed and more affluent individuals face a higher risk of underinsurance, with 43% admitting they have never reviewed their policies.
Around 46% of Indians rely on personal research when making life insurance decisions, often neglecting to reassess their coverage after significant life events.
