81% believe life insurance under 10x their annual income sufficient: Survey

1 in 3 Indians have never reviewed their life insurance coverage, even after major life events like marriage, childbirth, or income growth

A staggering 81 per cent of Indians believe that life insurance coverage of less than 10 times their annual income is adequate for financial security, reveals the latest ‘Underinsurance Survey 2025’ by Bajaj Allianz Life Insurance in collaboration with NielsenIQ.

 

However, the actual life cover held by individuals averages just 3.1 times their income, significantly below the industry-recommended benchmark of 10 times, highlighting a major financial protection gap.

 

The survey, conducted across 2,000 individuals from metro, Tier-1, and Tier-2 cities sheds light on the underinsurance crisis in India. While life insurance adoption is increasing, with the average age of first-time buyers dropping from 33 to 28 years, financial awareness regarding adequate coverage remains low.

 

 

Major gaps in coverage and awareness

 

Indians perceive their life insurance coverage to be around 6.4 times their income, but actual figures reveal an average of only 3.1 times, exposing a significant disparity between perception and reality.

 

One in three policyholders has never reviewed their life insurance coverage, even after major life events like marriage, childbirth, or salary hikes. Among self-employed and affluent individuals, this number rises to 43 per cent.

 

Despite inadequate coverage, 82 per cent of Indians remain confident that their current life insurance policies will secure their family’s financial future.

 

India, despite being one of the world’s fastest-growing economies, has a total sum assured at just 70 per cent of GDP—significantly lower than countries like the US (251 per cent), Thailand (143 per cent), and Malaysia (153 per cent), highlighting a critical protection gap. This shortfall can leave families financially vulnerable, forcing them to dip into savings or liquidate assets in times of crisis, which can derail their life goals. To truly safeguard one’s loved ones, it’s essential to assess coverage needs holistically—factoring in income, liabilities, and future aspirations. A simple rule of thumb is to have life cover at least 10 times one’s annual income, ensuring financial security when it matters most,” said Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance.  Calculate EMI: EMI Calculator Tool

 

Key factors influencing life insurance decisions: The survey identified family responsibilities, higher income levels, and health concerns as the primary reasons driving insurance purchases. Additionally, 46 per cent of respondents prefer conducting personal research before making insurance decisions. However, many overlook major life changes when reassessing their coverage needs, contributing to underinsurance.

 

The findings underscore a critical gap in life insurance awareness and adequacy in India. While more people are recognising the importance of life insurance, misconceptions about required coverage persist, leaving many underinsured. Many find the concept of adequate life insurance coverage complex or struggle to grasp its importance.

 

With the ambitious vision of achieving ‘Insurance for All by 2047,’ experts emphasise that the first step is ensuring every policyholder secures adequate coverage. As more Indians recognise the importance of life insurance, it is crucial to bridge the knowledge gap and encourage informed financial planning for long-term security.