ULIPs retain dominance in private insurers' product mix despite policy push

This is despite sharper push towards protection products after GST relief

Unit-linked insurance plans (ULIPs) continued to dominate the product mix of India’s leading private life insurers in FY26 despite the industry’s sharper push towards protection products after the goods and services tax (GST) exemption on life insurance policies. 

Investor presentations and analyst interactions showed that ULIPs remained the largest contributor to annualised premium equivalent (APE) across major private insurers during the year, supported by sustained customer appetite for equity-linked savings products. Protection products, while growing at a faster pace, continued to account for a relatively small share of overall business. 

This trend has also drawn concern from some industry stakeholders. Ashwini Tewari, managing director (corporate banking and subsidiaries) at State Bank of India (SBI), said insurers should place greater emphasis on protection products rather than market-linked offerings. 

“In my view, the first task of an insurance company should always be to sell protection. But protection, unfortunately, accounts for just 10 per cent of the industry share,” Tewari said, adding that he had often told SBI Life Insurance that selling ULIPs was “not a good idea” from an insurer’s perspective. 

The shift in focus towards protection products gained momentum after the GST Council, in September 2025, reduced the tax rate on individual life insurance policies from 18 per cent to zero. Insurers said the move improved affordability and boosted demand for protection policies, particularly higher sum-assured covers, in the second half of FY26. 

At SBI Life Insurance, ULIPs accounted for 60 per cent of total APE in FY26, compared with 64 per cent a year earlier, while protection products contributed 9 per cent. The insurer said it was seeking to gradually rebalance its portfolio towards non-ULIP products. 

“For the last two years, we have been trying to achieve a more balanced product mix by aggressively expanding non-ULIP policies. During the year, we grew the ULIP portfolio by 6 per cent, but growth in other segments was higher, resulting in overall growth of 13 per cent,” Amit Jhingran, managing director & chief executive officer of SBI Life Insurance, told Business

Standard recently. 

At HDFC Life Insurance Company, ULIPs accounted for nearly 44 per cent of individual APE in FY26, up from 39 per cent a year earlier. Retail protection business, however, grew 43 per cent year-on-year, with the protection share in individual APE rising to 7 per cent from 5 per cent in FY25. The insurer said lower pricing following the GST exemption and a stronger product portfolio had supported growth in protection products, while customers could gradually rebalance towards long-term savings and protection offerings. 

“We enter FY27 with the GST transition largely complete, a yield curve supportive of non-par products, and an agency channel that is stronger today than it was a year ago in terms of reach, productivity, and quality of business. The protection portfolio is structurally larger and more meaningful than at any previous point in our journey,” the management said.

Insurers have also been increasing the attachment of protection riders to ULIP products to support value of new business (VNB) margins, analysts said. 

At ICICI Prudential Life Insurance, linked products remained the largest component of APE, although their share eased marginally to 48 per cent from 49 per cent a year earlier. The protection mix rose 2.2 percentage points year-on-year (Y-o-Y) to 17.9 per cent, while the retail protection business grew 32.3 per cent during the year. The insurer said GST reforms had emerged as a key tailwind for retail protection products by improving customer traction and awareness, while reiterating its focus on balanced growth across product segments. 

State-owned Life Insurance Corporation of India (LIC), meanwhile, continued to have a lower share of linked products in its portfolio. Unit linked products accounted for 25.12 per cent of individual new business premium of ₹44,941 crore during the April-December period of FY26, while protection accounted for 0.28 per cent.

 

The cover story 

• ICICI Prudential’s protection products mix rose to 17.9% in FY26
• Linked products formed 48% of ICICI Prudential’s annualised premium equivalent (APE) in FY26
• HDFC Life’s ULIP share in individual APE rose to 44% from 39%
• SBI Life’s non-ULIP segments grew faster than its ULIP portfolio
• LIC’s term insurance share remained low at 0.28% of new business premium