Starting in September, Indian consumers may gain the ability to purchase straightforward term life insurance policies from various providers through an online platform that eliminates agent commissions. The Insurance Regulatory and Development Authority of India (IRDAI) is backing Bima Sugam, an electronic insurance marketplace set to launch in phases. It will begin with vehicle insurance in July, followed by health coverage in August, and term life options in September.
Media reports from IRDAI updates in March 2026 indicate that insurance companies have agreed in principle to provide products without commissions on this platform, substituting them with a small fee paid by users. The official commission structure is still pending announcement, but its release could mark a significant shift in India’s insurance sector.
In its May 27, 2024, investor presentation, the Life Insurance Corporation of India (LIC) detailed a breakdown of its non-participating individual policies, categorizing them into savings, annuities, protection, and unit-linked insurance plans (ULIPs). A note explained that this segmentation was absent from the previous year’s report but is now included. The protection segment has appeared in subsequent presentations, showing little change: it represented 0.72% of individual annualized premium equivalent (APE) in fiscal 2022-23 (reported retroactively in May 2024), 0.61% in 2023-24, 0.6% in 2024-25, and 0.64% for the nine months ending December 2025. For almost two years, India’s biggest insurer has indicated to investors that its protection business is negligible.
Of every 100 rupees in new individual annualized premiums LIC collected in the first nine months of fiscal 2025-26, just 0.64 rupees supported protection. This equates to 176 crore rupees out of 27,552 crore rupees total. The vast majority—99%—went to endowment plans, non-participating savings, ULIPs, and annuities, which combine limited life coverage with average investment returns.
(LIC’s under-1% share is based on premiums and policy numbers. It does not release data on sum assured by product type, and since one rupee of term premium provides far more coverage than one rupee of endowment premium, the protection portion of LIC’s total sum assured is likely greater.)
LIC accounts for over half (57%) of new life insurance sales in India. Its network of 1.4 million agents forms one of the nation’s largest sales teams in services. However, less than one rupee in every 150 they generate funds life coverage.
The situation improves slightly at four major private insurers. For the nine months ending December 2025, individual pure protection made up about 4% of individual APE at SBI Life, 7% at HDFC Life, around 9% for ICICI Prudential’s retail protection (including credit life), and 13% for Max Life’s combined protection and health category. In the first nine months of fiscal 2025-26, life insurers in India gathered 310,946 crore rupees in first-year premiums and issued 91.69 lakh crore rupees in new sum assured, yielding about 29.5 rupees of coverage per rupee of premium.
A standard term policy for a healthy 35-year-old offers approximately 650 to 800 rupees of coverage per rupee. The disparity widens when excluding group term policies (which provide high coverage multiples due to pure risk pricing), leaving individual business at roughly 15 to 20 rupees of coverage per rupee. This highlights a protection shortfall: a 20- to 40-times difference between actual coverage per premium rupee and what a focused protection product could deliver.
In 2020, Swiss Re estimated India’s mortality protection gap—the shortfall between needed and existing coverage if a primary earner dies—at $16.5 trillion.
Indian households are indeed acquiring more life insurance. In fiscal 2023-24 (the latest year with available savings figures), 17% of household savings flowed into life insurance, totaling about 5.89 lakh crore rupees, per the Reserve Bank of India’s 2024-25 Handbook of Statistics on Indian Economy. Four decades earlier, in 1983-84, this share was 7%. While insurance’s role in savings has more than doubled over a generation, the protection gap has expanded to $16.5 trillion.
This pattern is familiar from personal anecdotes. Many start with money-back policies bought through trusted acquaintances. These offer modest sums assured and returns, with periodic payouts creating an illusion of smart saving, often without understanding concepts like internal rate of return. A life insurance
