How Indians insured, invested and paid in 2025: Key financial trends

Indians shift to higher covers, longer tenures and UPI payments in 2025

India’s personal finance choices in 2025 reflected a clear shift towards higher protection, longer-term planning and digital-first payments, according to a new report by Policybazaar. From health and term insurance to investments and travel cover, consumers appeared more deliberate, better informed and increasingly willing to pay for stronger financial security.

Health insurance: Bigger covers, longer tenures

Health insurance buying saw a decisive shift towards higher cover sizes after the removal of GST. The average sum insured rose 31 per cent to Rs 19 lakh, from Rs 14.5 lakh earlier. Policies offering Rs 10–25 lakh grew sharply, while sub-Rs 10 lakh covers declined.

 

Two clear trends stood out  

 

First, multi-year policies gained traction, with four- and five-year plans seeing over 50 per cent growth, suggesting buyers are locking in protection for longer. Second, unlimited health plans moved from a niche to mainstream, accounting for nearly 16 per cent of eligible purchases in 2025, up from about 2 per cent a year ago.

 

Tier III cities drove most of the growth, increasing their share to 70 per cent, while Tier 1 cities saw a decline. Heart ailments, cancer and cataract remained the top claim reasons.

 

Term insurance: Young earners take the lead

Term insurance demand grew 37 per cent in 2025, led by buyers aged 25-40 years. A Rs 1 crore sum assured remained the most popular choice, though interest in Rs 2 crore and higher covers rose gradually.

 

Salaried individuals formed 70 per cent of buyers, and most preferred policies running till ages 60 or 70. Physical medical tests continued to dominate underwriting, with video medicals limited largely to NRI customers. 

 

Motor insurance: EVs and add-ons reshape choices

Electric vehicles emerged as the fastest-growing motor insurance segment. New EV policy purchases rose nearly 2.5 times year-on-year, with premiums jumping about 200 per cent, far outpacing petrol and diesel vehicles.

 

Buyers also moved towards protection-heavy covers. Add-ons such as roadside assistance and zero depreciation saw high adoption, especially for new vehicles. Usage-based Pay-As-You-Drive policies entered the mainstream, offering savings of up to 30 per cent for low-mileage urban drivers. 

 

Travel and investments: Higher covers, earlier planning

Travel insurance grew 15 per cent year-on-year, with travellers opting for higher covers, especially for the US and Canada due to steep healthcare costs. Senior citizens emerged as a key growth segment, while individual policies dominated.

 

On the investment side, millennials aged 31-40 accounted for nearly half of all purchases. Retirement planning started earlier, with under-35 investors now making up one-fourth of retirement product buyers, signalling a growing FIRE mindset.

 

Payments: UPI becomes the default

UPI accounted for over 64 per cent of insurance premium payments in 2025, cementing its position as the default payment rail.

 

Monthly payment plans dominated life insurance, while health insurance showed a mix of annual and subscription-based payments. UPI Autopay and BNPL also saw strong first-time adoption, pointing to rising comfort with automated and flexible payment options. 

 

Overall, the data suggests Indian consumers are treating insurance and investments less as compliance products and more as core financial services, with protection, convenience and long-term value at the centre of decision-making.