Mind the gap: Why Indians don’t buy term insurance
Most Indians carry a quiet optimism: “I’m healthy. I’m young. It can wait.” This optimism bias makes conversations about mortality feel awkward, heavy, or unnecessary.
- Nov 28, 2025,
- Updated Nov 28, 2025 11:26 AM IST
On a warm July evening in Pune, a 38-year-old sales manager sat at his dining table filling out his daughter’s school forms. Fee receipts, vaccination cards, future plans everything was neatly arranged. For a man who tracked his expenses on spreadsheets and planned holidays months in advance, his financial life looked perfectly organised. Except for one thing.
He still didn’t have term insurance. “Next month for sure,” he murmured the same promise he had repeated for three years.
It wasn’t about money. It wasn’t about understanding the product. It wasn’t even about procrastination.
It was the emotional discomfort of imagining a future where he might not be around. And this hesitation is far more common in India than we admit. Despite rising awareness, term insurance penetration remains low not because people don’t care, but because the real barriers are behavioural.
1. The Emotional Barrier: “Nothing will happen to me”
Most Indians carry a quiet optimism: “I’m healthy. I’m young. It can wait.” This optimism bias makes conversations about mortality feel awkward, heavy, or unnecessary. We plan vacations with precision, but planning for life’s uncertainties feels unsettling. So people avoid it not out of carelessness, but out of discomfort.
Ironically, families who eventually buy term insurance don’t do it out of fear. They do it out of responsibility.
2. The Myth Barrier: “If nothing happens, I get nothing”
Many Indians grew up seeing insurance as a savings tool. So when they hear that term insurance has no maturity benefit, they instinctively resist it. But term insurance isn’t meant to generate returns, it's meant to replace income so a family’s life doesn’t collapse financially.
It’s like a seatbelt. You don’t wear it expecting returns. You wear it for protection.
Term insurance works the same way except the life it protects belongs to the family you leave behind.
3. The Complexity Barrier: “It’s confusing… I’ll decide later”
Riders, disclosures, sum assured, tenure the jargon can overwhelm first-time buyers. And when people feel confused, they delay.
But delay has a silent cost. Premiums rise with age. Medical approvals get tougher. Health issues can impact eligibility.
A plan that’s affordable at 30 can become twice as costly at 40.
Still, people aren’t avoiding insurance, they’re avoiding complexity.
4. The Trust Barrier: “Will my claim be honoured?”
Even though claim settlement ratios of credible insurers are strong, doubts persist: “What if something goes wrong later?” These worries usually stem from misunderstood terms, incomplete disclosures, or stories heard second-hand. When people don’t fully grasp how claims work, trust becomes fragile.
Trust grows only when information is clear, not when fear is used as a trigger.
5. The Priority Barrier: “I have bigger expenses right now”
Home loans, school fees, groceries, fuel - term insurance often gets pushed to “later.” The trouble is, “later” rarely arrives. What many don’t realise is how small the cost of basic protection usually is often less than a dinner out or a monthly subscription. But because the expense doesn’t feel urgent today, it keeps slipping down the list.
So Why Don’t Indians Buy Term Insurance?
Not affordability. Not lack of awareness. Not product shortage.
The real reason is emotional resistance and the difficulty of imagining uncomfortable possibilities.
Buying term insurance isn’t a financial decision. It’s an emotional one.
A Simple Way to Break the Hesitation
1. Think about people, not numbers. - Who depends on your income and for how long?
2. Focus on years of stability. - Protection should reflect the number of years your family would need support.
3. Buy earlier, not later. - You get simpler approvals and lower costs.
4. Prioritise clarity over price. - Transparency builds confidence; cheap shortcuts don’t.
He eventually bought his policy not because someone persuaded him, but because he recognised the gap in his own planning. “This is just one less uncertainty for my family,” he said, almost relieved. For many Indians, that is the real purpose of term insurance: reducing vulnerability, not amplifying fear. A small step today that helps a family stand steady tomorrow.
(Views are personal; the author is Joint Chairman and MD at BajajCapital Ltd)
On a warm July evening in Pune, a 38-year-old sales manager sat at his dining table filling out his daughter’s school forms. Fee receipts, vaccination cards, future plans everything was neatly arranged. For a man who tracked his expenses on spreadsheets and planned holidays months in advance, his financial life looked perfectly organised. Except for one thing.
He still didn’t have term insurance. “Next month for sure,” he murmured the same promise he had repeated for three years.
It wasn’t about money. It wasn’t about understanding the product. It wasn’t even about procrastination.
It was the emotional discomfort of imagining a future where he might not be around. And this hesitation is far more common in India than we admit. Despite rising awareness, term insurance penetration remains low not because people don’t care, but because the real barriers are behavioural.
1. The Emotional Barrier: “Nothing will happen to me”
Most Indians carry a quiet optimism: “I’m healthy. I’m young. It can wait.” This optimism bias makes conversations about mortality feel awkward, heavy, or unnecessary. We plan vacations with precision, but planning for life’s uncertainties feels unsettling. So people avoid it not out of carelessness, but out of discomfort.
Ironically, families who eventually buy term insurance don’t do it out of fear. They do it out of responsibility.
2. The Myth Barrier: “If nothing happens, I get nothing”
Many Indians grew up seeing insurance as a savings tool. So when they hear that term insurance has no maturity benefit, they instinctively resist it. But term insurance isn’t meant to generate returns, it's meant to replace income so a family’s life doesn’t collapse financially.
It’s like a seatbelt. You don’t wear it expecting returns. You wear it for protection.
Term insurance works the same way except the life it protects belongs to the family you leave behind.
3. The Complexity Barrier: “It’s confusing… I’ll decide later”
Riders, disclosures, sum assured, tenure the jargon can overwhelm first-time buyers. And when people feel confused, they delay.
But delay has a silent cost. Premiums rise with age. Medical approvals get tougher. Health issues can impact eligibility.
A plan that’s affordable at 30 can become twice as costly at 40.
Still, people aren’t avoiding insurance, they’re avoiding complexity.
4. The Trust Barrier: “Will my claim be honoured?”
Even though claim settlement ratios of credible insurers are strong, doubts persist: “What if something goes wrong later?” These worries usually stem from misunderstood terms, incomplete disclosures, or stories heard second-hand. When people don’t fully grasp how claims work, trust becomes fragile.
Trust grows only when information is clear, not when fear is used as a trigger.
5. The Priority Barrier: “I have bigger expenses right now”
Home loans, school fees, groceries, fuel - term insurance often gets pushed to “later.” The trouble is, “later” rarely arrives. What many don’t realise is how small the cost of basic protection usually is often less than a dinner out or a monthly subscription. But because the expense doesn’t feel urgent today, it keeps slipping down the list.
So Why Don’t Indians Buy Term Insurance?
Not affordability. Not lack of awareness. Not product shortage.
The real reason is emotional resistance and the difficulty of imagining uncomfortable possibilities.
Buying term insurance isn’t a financial decision. It’s an emotional one.
A Simple Way to Break the Hesitation
1. Think about people, not numbers. - Who depends on your income and for how long?
2. Focus on years of stability. - Protection should reflect the number of years your family would need support.
3. Buy earlier, not later. - You get simpler approvals and lower costs.
4. Prioritise clarity over price. - Transparency builds confidence; cheap shortcuts don’t.
He eventually bought his policy not because someone persuaded him, but because he recognised the gap in his own planning. “This is just one less uncertainty for my family,” he said, almost relieved. For many Indians, that is the real purpose of term insurance: reducing vulnerability, not amplifying fear. A small step today that helps a family stand steady tomorrow.
(Views are personal; the author is Joint Chairman and MD at BajajCapital Ltd)