Term insurance gains popularity among HNIs

The term insurance market in India has experienced a steady surge in demand in recent years, with a noticeable increase in interest among the high net-worth individuals (HNIs). According to data shared by PolicyBazaar, there was an 11.7 per cent increase in the number of policies purchased by HNIs in FY23 compared with the previous fiscal year, which is an indicator of the growing interest among affluent individuals in securing their financial assets from potential risks and uncertainties.  

The data reveals that about 25 per cent of the term insurance business in the FY23 came from HNIs. Interestingly, there has been a significant increase in the number of female HNI buyers in the recent past. The share of this segment went up from 12 per cent in FY22 to 17 per cent in FY23. It is a remarkable progress; especially as financial matters were predominantly handled by men. 

Analysing the purchase patterns of HNI buyers provided by PolicyBazaar, it was found that the most popular cover amount was Rs 1.75 crore, with approximately half of the HNI buyers choosing this insurance coverage. This signifies that HNIs have been prioritising protection for themselves and their dependents, thereby, casting light on the increasing necessity of term insurance in today’s volatile economic environment. 

Surprisingly, a vast majority of non-residential Indian (NRI) customers of term insurance fall into the HNI category—around 75 per cent of all NRI customers were revealed to be HNIs. One of the major drivers that contributed to this remarkable growth is the facility of tele-medical check-ups, which saw a 3x increase in NRI buyers. The absence of feasible physical check-ups due to various reasons such as non-availability of proper channels or the tedious execution processes had been a major deterring factor for many potential NRI buyers. But with the increasing convenience offered by digitalization, term insurance has become more accessible and the improved customer experience is reflected in the escalated growth figures. 

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Insurance companies have started recognising the potential among people leading a healthier lifestyle, which is often a byproduct of high income levels. Such individuals also have the advantage of access to better medical facilities. These two factors have prompted the insurance firms to modify their underwriting guidelines in the favour of their customers, providing term insurance based on video medicals. 

In terms of regions, the United Arab Emirates (UAE) and Gulf Cooperation Council (GCC) countries bag the top positions with 32% of the Annual Premium Equivalent (APE) contribution each. This amounts to more than half of the total APE contribution, followed by Europe contributing 12 per cent and the United States and Canada making a 10 per cent contribution. 

A breakdown of the age demographics of buyers sheds light on the fact that the majority of these HNI buyers fall within the 30-40 age range, constituting 31 per cent of total HNI buyers. This implies that the younger demographic with disposable income at hand are willing to invest in securing their financial future, nurturing a grassroots level change in the traditional notions surrounding term insurances and its relevance. 

The term insurance market in India has been seeing an upward trend with people beginning to understand the benefits and relevance of financial planning and security. Notably, the HNIs have been a big contributor to the market and with the increased participation of the NRI and younger demographic, the term insurance segment is poised for further growth. The inclusion of more women is certainly a promising aspect, marking a necessary shift in financial independence and decision-making.