Term insurance purchases by self-employed surge 58% in FY25

Policybazaar

India’s self-employed professionals are buying term insurance at a record pace, with purchases soaring 58 percent in FY25, according to data from Policybazaar.

The surge is largely being driven by Millennials and Gen Z, who now make up a staggering 88 percent of self-employed term insurance buyers, the data pointed out.

This segment’s appetite for financial protection is deepening, as seen in the rising demand for higher coverage, the report said.

Policies offering cover between Rs 50 lakh and Rs 1 crore, and beyond, are growing faster than ever, driven by rising living costs, inflation, and increasing awareness about financial planning.

Policybazaar’s data also showed a clear shift towards monthly premium payments, indicating a preference for cash flow flexibility among young self-employed earners.

In a notable trend, women now account for 15 percent of self-employed term insurance buyers, up from just 9 percent in FY20.

“The growth of women-led start-ups is translating into stronger insurance adoption,” the report said.

While the Rs 50 lakh cover remains the most popular among self-employed individuals, policies with coverage of Rs 1 crore or more are gaining ground at an accelerated pace.

Buyers are increasingly opting for features like Accidental Death Benefit and Waiver of Premium, safeguards that ensure financial continuity for families and businesses in the face of unexpected events.

Many are also opting for the Married Women’s Property Act (MWPA) to ring-fence benefits for their families.

Delhi, Bengaluru, and Mumbai continue to lead the demand for term insurance among the self-employed. Meanwhile, Pune, Hyderabad, and Chennai are emerging as new hotspots, thanks to a rising number of small business owners and self-practicing professionals seeking affordable coverage.

The spike in demand reflects a shift in how insurance is being tailored and accessed, said Varun Agarwal, Head of Term Insurance at Policybazaar.

“As India’s self-employed population expands rapidly, the demand for term insurance among this group is set to rise significantly,” he said.

This growth is driven by customised term plans that eliminate the need for traditional income documentation like ITRs or salary slips, he said.

Insurers are now evaluating financial stability through digital metrics, creditworthiness, loan history, and surrogate proofs like vehicle IDV, or current market value of your vehicle, he added.