Large-ticket term insurance policies have experienced a significant surge in market share, with policies having sum assured above ₹2 crore accounting for 34% of term insurance sales in FY26, according to data from Policybazaar. This represents a substantial increase from 24% in the previous year, marking a 10-percentage-point jump that reflects both improved affordability and changing consumer behavior patterns. The shift reflects a growing share of Indian consumers opting for term insurance covers above ₹2 crore following the government's decision to cut the goods and services tax (GST) on retail protection plans from 18% to zero.
The shift in policy preferences has resulted in a corresponding decline in lower-value coverage options. As reported by Policybazaar, the share of policies with sum assured below ₹2 crore fell to 66% from 76% during the same period, indicating a clear trend toward higher-value protection plans. This represents a 10-percentage-point decrease in the share of smaller policies, demonstrating the market's move toward more comprehensive coverage options that are reshaping the product mix at the country's largest private life insurers.
The September 2025 GST exemption on retail term policies has been a key catalyst for this market transformation, as reported by Policybazaar. The exemption removed the 18% levy on retail term policies, significantly reducing monthly premiums and eliminating a psychological price barrier for consumers considering higher-value covers. This policy change has accelerated the trend toward larger coverage amounts that was already underway among insurance buyers, with the exemption providing direct affordability benefits that have made higher sum-assured policies more accessible to consumers.
According to Varun Agarwal, Head of Term Insurance at Policybazaar, the increased adoption of higher sum-assured policies has been driven by better affordability, competitive pricing, increased awareness, and customers recognising the need for larger covers due to inflation and rising financial responsibilities. Industry executives noted that inflation and rising household financial obligations are reinforcing the trend, prompting buyers to reassess the adequacy of their existing protection and opt for more comprehensive coverage options. The combination of improved affordability and broader reassessment of household risk exposure has accelerated the shift toward larger term insurance policies.
