India’s growing interest in insurance is not yet translating into adequate coverage or informed choices, according to Policybazaar’s latest study, “How India Buys Insurance 2.0.”
The April report shows that 48% of existing health insurance customers still have a sum insured below ₹5 lakh, which the platform notes is insufficient in the context of modern hospitalization expenses.
The report draws on behavior data from over 50 million customers across more than 60 insurers. It reveals that 47.6% of Indians do not know what term insurance is, despite its role in offering large life cover at affordable premiums. The study found this lack of awareness to be especially prevalent among younger, less financially literate groups.
Traditional channels still dominate when it comes to insurance advice and purchases—45% of users cite family and friends as their primary source—but digital channels are close behind at 42%, reflecting the rise of online platforms as trusted tools for financial decision-making. In contrast, only 13% of consumers used offline agents or physical branches to complete their purchase.
Product complexity and poor claims experience continue to be a barrier to long-term engagement. According to the report, 68% of dissatisfied users cited either complex product terms or unsatisfactory claims support as their reason for discontinuing or not renewing their policy.
Digital empowerment is influencing not just how insurance is purchased, but also how insurers are evaluated. The report shows that 31% of consumers actively checked reviews and claims settlement performance before choosing their provider. This trend is strongest among urban, digitally savvy customers who rely on peer feedback and public data when making financial decisions.
Ultimately, Policybazaar concluded that bridging the gaps in both coverage adequacy and product understanding will depend on improving education, simplifying offerings, and maintaining transparency across the customer journey.
