A recent survey has raised concerns over the adequacy of life insurance coverage among the public. The Underinsurance Survey 2025, conducted by Bajaj Allianz Life Insurance in partnership with NielsenIQ, stated that a remarkable 81% of Indians believe that life insurance coverage of less than 10 times their annual income is sufficient for financial security.
Despite this belief, the average life insurance coverage held by individuals stands at just 3.1 times their income, falling well short of the recommended industry benchmark of 10 times. This discrepancy points to a significant financial protection gap that needs to be addressed.
This insight suggests that a significant portion of the population may be underinsured, potentially impacting their financial stability in the face of unexpected events. The perception of adequate coverage under such conditions reveals a critical gap in understanding and awareness regarding life insurance planning, which is a fundamental aspect of personal financial security.
The potential shortfall in coverage raises questions about the general awareness and understanding of life insurance as an essential financial planning tool. Life insurance is designed to act as a financial safety net, providing support in cases of income loss due to unforeseen circumstances. However, the prevailing belief that coverage under ten times one's annual income is adequate could lead to financial challenges if the insurance payout falls short of meeting future expenses, debts, and financial goals. This gap highlights the need for increased awareness and education about appropriate life insurance coverage levels.
Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, pointed out that India's sum assured amounts to only 70% of its GDP. This figure is noticeably lower than that of other countries such as the US (251%), Thailand (143%), and Malaysia (153%). Chugh highlighted that this deficiency may compel families to dip into savings or liquidate assets in times of financial emergencies, potentially derailing their long-term financial plans.
Understanding life insurance policies requires careful consideration due to their varied and complex nature. Policies differ widely, with various terms and conditions that impact their effectiveness. Consumers must evaluate their financial needs thoroughly, considering factors such as inflation, lifestyle, and future financial obligations, to determine the appropriate level of life insurance coverage. This comprehensive assessment is essential to ensure that policyholders safeguard their families' financial well-being adequately.
This survey sheds light on an industry-wide issue that extends beyond individual companies, highlighting the need for enhanced consumer education across the insurance sector. Competitors in the insurance market, notably those with significant market share, face similar challenges in addressing underinsurance.
By focusing on consumer education and awareness, the industry can improve individual financial security and strengthen consumer trust and confidence in life insurance products. This approach is vital for fostering a well-informed consumer base capable of making informed decisions about their insurance needs.