Renewal premiums contributed 55% of the total premium underwritten by India’s life insurance industry in FY25, underscoring strong policyholder retention and the long-term nature of life insurance products, according to an analysis of the IRDAI Annual Report 2024-25 by the Insurance Awareness Committee–Life Insurance (IAC-LI).
The industry reported total premium income of ₹8.86 lakh crore during FY25, registering growth of 6.73%. The strong renewal contribution reflects continued customer commitment towards financial protection, disciplined savings and retirement planning.
The sector paid benefits worth ₹6.30 lakh crore during the year, equivalent to nearly 72% of net premiums collected, highlighting its role in providing financial support to policyholders and beneficiaries.
Strong claims performance
Individual death claim settlement ratio stood at 98%, while the group claim settlement ratio was 99.68%, reflecting continued focus on policyholder servicing and claims support.
“Life insurance products are designed to address long-term financial needs that evolve across different life stages. The strong share of renewal premiums demonstrates sustained customer commitment towards financial protection, disciplined savings and retirement preparedness,” said IAC–LI Chairperson Kamlesh Rao.
“It also reflects growing awareness about the importance of maintaining long-term financial protection and continuity,” he added.
ULIPs continue to attract investors
Assets under management in Unit Linked Insurance Plans (ULIPs) increased to ₹8.29 lakh crore from ₹7.61 lakh crore in the previous year, accounting for 12% of total investments managed by life insurers.
“ULIPs continue to attract long-term investors seeking a combination of insurance protection and market-linked wealth creation opportunities. Their long-term structure supports disciplined investing aligned with evolving financial goals,” Rao said.
Despite the positive trends, life insurance penetration slipped marginally to 2.7% of GDP, indicating significant scope for expanding financial protection coverage across households.
Scope for greater coverage
According to the committee, recent regulatory reforms by the IRDAI have strengthened transparency, disclosures, product suitability and policyholder protection.
“These measures are improving consumer confidence and strengthening long-term engagement with life insurance products. As financial needs become more complex, long-term insurance solutions will continue to play an important role in helping households balance protection, savings, retirement planning and wealth creation,” Rao said.
The committee noted that India continues to face a significant life insurance protection gap, with 87% of the population underinsured. The gap exceeds 90% among individuals aged 18-35, highlighting the need for greater awareness and adoption of life insurance products.