The number of in-force policies with a sum assured of more than ₹50 lakh rose from 4.4 million in FY2021 to 7.4 million in FY2025, an increase of about 68%. Over the same period, the share of policies with a sum assured of ₹2 lakh or less fell from 65.1% to 53.6%.
The data indicates a gradual movement towards higher-value cover, although lower sum assured policies continue to make up a significant part of the overall policy base.
Higher sum assured categories gain share
The shift was visible across several higher sum assured categories.
The share of policies with a sum assured between ₹2 lakh and ₹5 lakh increased by 5.6 percentage points between FY2021 and FY2025. The ₹10 lakh to ₹25 lakh category gained 2 percentage points.
At the higher end, policies with a sum assured above ₹50 lakh increased by 68% over the five-year period. The number rose from 44 lakh to 74 lakh.
The overall number of in-force life insurance policies, however, remained broadly stable at around 343 million during the period. This suggests that the change in the policy mix has largely involved a movement towards higher-value policies within a relatively stable overall base.
Average premium per policy rises
The increase in coverage levels was accompanied by a rise in average annual premium per in-force policy.
Average premium increased from ₹15,567 in FY2021 to ₹22,195 in FY2025, a rise of 42.6%.
However, the premium increase cannot by itself be taken as a measure of higher life cover. Premiums vary across products and depend on factors such as the policyholder’s age, policy term and type of insurance.
More than half of policies still have cover of ₹2 lakh or less
Despite the increase in higher-value policies, the IIB data shows that 53.6% of in-force policies in FY2025 had a sum assured of ₹2 lakh or less.
The figures therefore point to two parallel trends: a growing share of policies at higher coverage levels and a large existing base of policies with relatively low sum assured.
The adequacy of life insurance cover cannot be determined from the sum assured alone. It depends on factors such as income, outstanding debt, dependants and future financial obligations. A rise in higher-value policies, therefore, does not necessarily mean that households are adequately insured.
Kamlesh Rao, Chairperson, Insurance Awareness Committee (IAC)-Life, said the IIB data shows that policyholders who remain invested in life insurance are strengthening their protection as their responsibilities change.
