Most Indians underinsured by 30-50% despite increased awareness: Report

Despite rising awareness, most Indians remain dangerously underinsured, reveals Bajaj Capital's Suraksha Kavach Report 2025.

Despite increased awareness and broader product availability, a large number of Indian households remain underinsured or misinsured. The Suraksha Kavach Report 2025, published by Bajaj Capital Insurance Broking Ltd. on Insurance Awareness Day, offers a compelling snapshot of India’s insurance divide across demographics, incomes, and regions.

 

Coverage exists, but is it enough?

 

From rising medical inflation to financial unpredictability, the report warns that the average Indian’s insurance cover is no longer enough to deal with life’s emergencies.

 

·  61 per cent of urban households could be financially destabilised by a single major hospital bill.

 

·  The average term plan is underpowered by 30–50 per cent relative to actual financial needs.

 

 

·  Gen Z and working women show financial awareness, but often delay purchasing an insurance.

 

“Insurance is not about betting against bad luck, it’s about preserving dignity and securing future choices,” said Sanjiv Bajaj, joint chairman & MD of Bajaj Capital.

 

The urban-rural divide

 

Despite digital expansion, rural India still lags behind when it comes to meaningful insurance adoption:

 

·  Only 16 per cent of rural respondents purchase insurance policies independently.

 

·  Health top-up awareness is below 20 per cent.

 

·  App-based journeys fail to deliver due to trust and language barriers.

 

Urban users, on the other hand, are more likely to understand the nuances of sum assured, add-ons, and portability options.

 

Women remain underinsured

 

Although women are increasingly contributing to household finances, they remain under-protected:

 

·  Just 1 in 5 working women owns a life policy.

 

·  In many cases, insurance decisions are made by male family members.

 

·  Complexity and lack of regional-language support keep many women away from formal coverage.

 

Gen Z’s insurance hesitation

 

Young Indians between 21–30 are financially active, investing in SIPs, trading, and budgeting but insurance doesn’t top their list:

 

·  64 per cent of Gen Z users research insurance, but only 41 per cent follow through with a purchase.

 

·  Barriers include policy complexity, confusion between life and health insurance, and high premiums.

 

More income, still underinsured

 

Even individuals earning Rs 25 lakh or more per year aren’t immune to underinsurance:

 

·  Many rely on basic or employer-provided group covers.

 

·  Lifestyle inflation and asset accumulation are outpacing actual policy coverage.

 

·  The assumption that wealth equals protection leads to inadequate contingency planning.

 

The report sends a clear message that India’s insurance story is improving in awareness, but not in action. “We are aware, but we still delay. We are covered, but not adequately,” said Venkatesh Naidu, CEO, Bajaj Capital Insurance Broking Ltd.

 

Until insurance becomes a proactive choice instead of a reactive measure, financial resilience will remain patchy.