Non-par products gain ground in listed life insurers' product mix in H1FY26

Volatile equity markets and lower deposit rates boosted demand for non-par guaranteed-return products in H1FY26, lifting their share across most listed life insurers except HDFC Life

The share of non-participating (non-par) products in the product mix of listed life insurers rose in the first half of 2025-26 (H1FY26) as volatility in the equity market dampened demand for unit-linked insurance plans (Ulips). 

The shift was further supported by a decline in deposit rates following the Reserve Bank of India’s 100-basis-point repo rate cut, which made non-par guaranteed products more attractive to customers.

 

Non-par product offers guaranteed benefits to a customer as per predetermined choices made by the customer. 

During the post earnings analyst call, SBI Life Insurance said that the share of non-par for the insurer has increased to 19.5 per cent of the Annualised Premium Equivalent (APE) in H1FY26, compared to 15.1 per cent in the same period last year. 

The share of non-par for ICICI Prudential Life Insurance has also increased. The management in the post earnings analyst call said, “It stood at 50:50 roughly in terms of the par to non-par, whereas earlier it used to be the ratio of 2:1 for the par to non-par share of the traditional business.” 

For Axis Max Life Insurance, the share of non-par increased to 26 per cent of APE in H1FY26 from 24 per cent in the same period last year. Life Insurance Corporation of India’s (LIC) share of non-par to individual APE grew to 36.31 per cent in H1FY26 from 26.31 per cent of the individual APE in H1FY25.

 

HDFC Life recorded a steep drop in non-par mix to 18 per cent in H1FY26 from 38 per cent in H1FY25 as they stayed away from this segment due to aggressive pricing and a higher base.  

Analysts at Kotak Institutional Equities said that private players reported 200-500 bps Y-o-Y rise in share of non-par to 18-35 per cent in Q2FY26 with the exception of HDFC Life, which reported a decline in share of non-par to 23 per cent compared to 43 per cent in Q2FY25. 

“Volatility in equity markets and lower deposit rates have likely led to pick up in demand for non-par products,” they said.

According to analysts at BNP Paribas, HDFC life was an exception, where non-par business fell 48 per cent Y-o-Y in H1FY26, as the company suggested that peer rates were too high, probably also influenced by a higher baseline of prior non-par policies in force. 

BNP Paribas analysts also said that, in the last 6 months, yields on greater than 10-year duration G-Secs have steepened sharply on account of a strong expected pipeline of very long-term paper supply. 

“These, in our view, present an attractive very long-term asset deployment opportunity for life insurance firms, which essentially create long-term liabilities through their sales of non-par savings/annuity products (with implicit rate of return guarantees),” the analyst said. 

Coverage trend

• Non-par products gained share in H1FY26 as Ulip demand softened and lower deposit rates made guarantees attractive
• SBI Life, ICICI Prudential, Axis Max Life and LIC all saw higher non-par contributions
• HDFC Life was the only exception, with its non-par mix falling sharply
• Analysts cite equity volatility and rising long-term G-Sec yields as key drivers boosting non-par demand