High-net-worth individuals (HNIs) are opting for higher life insurance coverage, with term insurance bookings in the segment doubling since April 2023 and the average sum assured rising 30%, according to data shared by Policybazaar.
The insurance marketplace said younger affluent buyers are emerging as a key growth segment, with customers below the age of 35 accounting for nearly 50% of HNI term insurance customers, according to the company’s data.
The trend points to growing demand for high-value life cover among affluent buyers, who may use term insurance to provide financial protection to dependants and cover long-term financial commitments.
Demand for multi-crore life cover increases
Policybazaar’s data shows that policies with a sum assured of ₹3 crore or more have increased by 25%. Around 5% of HNI customers opt for life cover of ₹5 crore or above, while 1.5% choose cover of ₹7 crore or more and 1% opt for policies with a sum assured of at least ₹10 crore.
The company said demand for high-value protection has strengthened further following the introduction of the zero-GST regime, although it did not provide a separate breakdown of the increase attributable to the tax change.
Among salaried HNI customers, the average sum assured is around ₹2 crore, according to Policybazaar. The highest sum assured purchased by an HNI customer on its platform stands at ₹25 crore.
Younger buyers emerge as a key segment
Nearly half of HNI term insurance customers are below the age of 35, according to the company’s data. Policybazaar said the growth is also being driven by younger affluent customers entering the market for higher life cover, rather than only by existing policyholders increasing their coverage.
Women accounted for around 18% of HNI term insurance buyers last year, while men made up the remaining 82%, the company said.
Critical illness, disability riders gain traction
Some HNI customers are adding riders to their base life insurance policies for protection against risks beyond death.
Policybazaar’s data shows that 20% of HNI customers opt for an accidental total and permanent disability (ATPD) rider, while 15% choose critical illness cover. Accidental death benefit riders account for 9% and waiver of premium (WOP) riders for 8%.
Riders provide additional benefits subject to the terms and conditions of the policy. Critical illness and disability cover can help address certain financial risks that a standard term life policy may not cover.
Limited-pay options preferred over regular premiums
Policybazaar said around 40% of HNI customers choose regular-pay policies, while the majority opt for limited-pay or pay-till-60 options.
Under regular-pay plans, premiums are generally paid throughout the premium-paying term. Limited-pay options allow policyholders to complete premium payments over a shorter period, even when the policy continues for longer.
The company also said fewer than 5% of HNI customers choose term return of premium (TROP) plans, which return eligible premiums under specified conditions. This indicates a preference for protection-focused term insurance over plans that offer a premium-return feature.
Bengaluru, Hyderabad lead in demand
Bengaluru and Hyderabad lead in HNI term insurance demand, according to Policybazaar. Mumbai, Gurugram, Faridabad and Bengaluru rank among the cities with the highest average sum assured, reflecting differences in the volume of policies purchased and the amount of coverage sought.
Varun Agarwal, head of term insurance at Policybazaar, said the company’s data showed a shift towards higher protection among affluent customers, with bookings doubling since April 2023 and the average ticket size increasing by 30%.
He also said ₹5 crore-plus policies had nearly tripled following the introduction of the zero-GST regime.
What should buyers keep in mind?
A higher sum assured does not automatically mean a policy is suitable for every household. The appropriate level of life cover depends on factors such as income, outstanding loans, dependants, future financial goals and existing assets.
Buyers should also compare premiums, exclusions, medical underwriting requirements and the terms of any riders before purchasing a policy.
NOTE TO READERS
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.
Policybazaar data shows HNI term insurance bookings double since April 2023: What explains the rise