More and more self-employed individuals are buying term insurance policies of Rs 1 crore and above, according to Policybazaar.
There is a 58% growth in term insurance purchases among self-employed individuals compared to the salaried segment, the report said
The reason for term life insurance to grow within this segment is because of tax-savings benefits and the introduction of tailored term plans that eliminate the need for traditional income documentation, such as ITRs or salary slips.
However, with this sharp growth rate, it’s likely that the self-employed segment will continue to be an important focus for insurance companies in the coming years.
In FY25, 88% of term insurance buyers among self-employed segment were millennials and Gen Z. This intriguing statistic shows that millennials and Gen Z, are increasingly becoming financially savvy and recognize the importance of securing their future.
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As they embark on key life milestones, such as beginning their professional careers and starting families, they view term insurance as a vital tool for protection. Additionally, Monthly premium payments are a strong preference among this segment for better cash flow flexibility and budget management.
Varun Agarwal, Head of Term Insurance at Policybazaar.com, says, “As India’s self-employed population expands rapidly, the demand for term insurance among this group is set to rise significantly. This growth is driven by customized term plans that eliminate the need for traditional income documentation, such as ITR or salary slips. Insurers now evaluate financial stability using digital metrics like creditworthiness, loan history, and surrogate proofs like vehicle IDV.”
Women Self-Employed Term Insurance buyers grow from 9% in FY 20 to 15% in FY25
“The impressive growth of women-led start-ups reflects an increasing recognition among women entrepreneurs of the importance of securing their families’ futures. The rise in term insurance adoption can be attributed to the increasing financial awareness and control women have over their finances, particularly in key metro areas where women-led businesses are flourishing,” the report said.
Dominance of Rs 50 lakh cover amount
Majority of self-employed individuals are opting for term insurance policies with a sum insured of Rs 50 lakh, which is 10% higher in FY25 than FY24. Amid rising living costs and inflation, there is a noticeable and accelerating trend of self-employed individuals purchasing term insurance policy with coverage amounts of Rs 1 crore and more.
Top markets driving demand for term insurance among self-employed individuals
Metro cities such as Delhi, Bengaluru, and Mumbai are at the forefront in recognizing term insurance as a crucial financial planning tool. Meanwhile, cities like Pune, Hyderabad, and Chennai, with their increasing number of small business owners and self-practicing professionals, are also experiencing a rise in demand for term insurance among self-employed individuals, particularly for affordable coverage options.
Accidental death benefit and waiver of premium tops add-ons for self-employed term insurance buyers
These add-on provides an extra layer of security, ensuring that their families and businesses remain financially stable even in the event of an unexpected accident. Moreover, self-employed individuals have the option to opt for Married Women’s Property Act (MWPA) as well.
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