India’s health insurance market is seeing a growing number of first-time buyers, with a rising share coming from smaller cities and opting for higher coverage than in previous years.
The number of fresh lives insured through Policybazaar increased 277% between FY22 and FY26, while first-time buyers from Tier 2 and Tier 3 cities grew 351% during the same period, according to an analysis by the online insurance marketplace.
The shift is also visible in the amount of coverage people are choosing when they buy their first health insurance policy. The average sum insured among first-time buyers more than doubled from ₹6.3 lakh in FY22 to ₹13.1 lakh in FY26.
The data points to two trends in India’s health insurance market: a wider geographical spread of first-time purchases and a preference for higher coverage at the time of entry.
Smaller cities account for a growing share of new buyers
First-time health insurance purchases have increased every year since FY22. According to Policybazaar, fresh lives insured grew 5% in FY23, 40% in FY24, 67% in FY25 and 54% in FY26.
Growth among first-time buyers in Tier 2 and Tier 3 cities was faster in each of these years. It stood at 7% in FY23, 43% in FY24, 80% in FY25 and 63% in FY26.
Consequently, the share of first-time buyers from these cities increased from 56% in FY22 to 67% in FY26. Around seven in 10 additional first-time buyers between FY22 and FY26 came from Tier 2 and Tier 3 markets.
Among the cities recording strong year-on-year growth in first-time purchases in FY26 were Malappuram (128.34%), Kottayam (122.66%), Alappuzha (120.76%), Thiruvananthapuram (114.74%) and Palakkad (113.63%).
The increasing contribution of smaller cities suggests that the expansion of health insurance purchases is no longer concentrated in larger urban markets.
First-time buyers are opting for higher health covers
The average sum insured chosen by first-time buyers increased every year between FY22 and FY26, with the sharpest annual rise recorded in FY26.
| Financial year | Average sum insured | Annual growth |
|---|---|---|
| FY22 | ₹6.3 lakh | — |
| FY23 | ₹7.6 lakh | 21% |
| FY24 | ₹8.8 lakh | 17% |
| FY25 | ₹9.6 lakh | 8% |
| FY26 | ₹13.1 lakh | 37% |
The preference for higher coverage is also reflected in the share of policies starting at ₹10 lakh or more. This increased from 32% in FY22 to 68% in FY26.
A ₹10 lakh cover has emerged as the most common starting point among first-time buyers, accounting for 51% of policies in FY26, according to Policybazaar.
The company attributed part of the increased preference for higher coverage to the removal of GST on individual health insurance policies in September 2025. However, the data also shows that the average cover had been increasing consistently in the preceding financial years.
Who is buying their first health insurance policy?
People in the 26-35 age group form the largest segment of first-time buyers, accounting for 27.66% of policies. Another 21.98% belong to the 36-45 age group.
Together, people aged 26-45 account for nearly half (49.64%) of first-time health insurance purchases.
The age profile indicates that a substantial proportion of new buyers are entering the market during their working and family-building years. Meanwhile, only 7.36% of first policies have an eldest insured member aged above 65.
| Age of eldest insured member | Share of first-time policies |
|---|---|
| 18-25 years | 6.31% |
| 26-35 years | 27.66% |
| 36-45 years | 21.98% |
| 46-55 years | 19.35% |
| 56-65 years | 17.35% |
| 66-75 years | 5.47% |
| 76 years and above | 1.89% |
There is also a significant gender gap in first-time purchases. Men account for 82.81% of buyers, compared with 17.19% for women, according to the analysis.
This indicates that women’s participation in purchasing health insurance remains considerably lower than men’s, leaving scope to expand coverage among women entering the insurance market for the first time.
Why the first-time buyer segment matters
First-time buyers are important to the expansion of health insurance because they represent people entering the formal insurance ecosystem rather than renewing or switching existing policies.
Sarbvir Singh, Joint Group CEO, PB Fintech, said that the increase in first-time purchases, particularly from Tier 2 and Tier 3 cities, reflects the widening reach of health insurance.
He said that many new entrants are in their late twenties and thirties, are buying insurance for families and are starting with higher coverage than first-time buyers did four years ago.
Singh also highlighted the importance of helping new customers understand their policies and supporting them during claims, given that first-time buyers do not have prior experience with health insurance.
The experience of these customers, he said, will play an important role in shaping the industry’s future as they remain part of the insurance ecosystem over the long term.
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