Large-ticket term policies gain traction; share above ₹2 cr rises to 34%

The share of policies below ₹2 crore fell to 66 per cent from 76 per cent over the same period

A growing share of Indian consumers is opting for term insurance covers above ₹2 crore following the government’s decision to cut the goods and services tax (GST) on retail protection plans from 18 per cent to zero, a shift that is reshaping the product mix at the country’s largest private life insurers.

 

Data from Policybazaar showed that policies with a sum assured of more than ₹2 crore accounted for 34 per cent of term insurance sales in FY26, up from 24 per cent a year earlier — a 10-percentage-point increase that reflects both the direct affordability benefit of the September 2025 GST exemption and a broader reassessment of household risk exposure.

 

The share of policies with a sum assured below ₹2 crore fell to 66 per cent from 76 per cent during the same period.

 

“People were gradually opting for higher sum-assured policies, but improved affordability following the GST exemption has accelerated the trend. This has been driven by better affordability, competitive pricing, increased awareness, and customers recognising the need for larger covers due to inflation and rising financial responsibilities,” said Varun Agarwal, Head of Term Insurance at Policybazaar.

 

The exemption, which removed the 18 per cent levy on retail term policies, significantly reduced monthly premiums and appears to have lowered a psychological price barrier for consumers considering higher-value covers. Industry executives said inflation and rising household financial obligations are reinforcing the trend, prompting buyers to reassess the adequacy of their existing protection.