Diwali 2025: Insurance Payments Get Festive Makeover With Digital Premium Boom

Insurance may not be the most obvious part of Diwali planning, but this year’s numbers suggest it is becoming one. Between September 22 and October 14, insurance payments in India jumped by 35 per cent compared to the same period last year, according to data from Policybazaar.

The timing matched the start of the festive spending rush, with Navratri, Dussehra and early Diwali purchases pushing up transactions, and the impact of the zero GST reform, which made select insurance products slightly more appealing to buyers.

The pattern is clear: people are not just buying more policies, but also changing how they pay for them. When it comes to digital payments, Unified Payment Interface (UPI) continues to dominate insurance transactions.

However, credit cards have made a strong comeback this festive season due to cashback offers and rewards. In terms of purchases, health and vehicle covers have seen the sharpest increases, which shows both seasonal trends and a growing sense of financial discipline.

Payment volumes overall rose 14 per cent week-on-week through the festive period. Motor and two-wheeler insurance led the surge, which aligns with the rise in vehicle purchases during Diwali. For many, buying a new car or bike now naturally includes buying the insurance alongside it.

Top Payment Gateways

UPI remains at the heart of this digital shift. Transactions through the platform were up 18 per cent during the period and now account for more than half of recurring premium payments.

The convenience of one-tap transactions, instant confirmations, and negligible failure rates seems to have sealed its place as the preferred payment method for younger, mobile-first buyers. It’s especially dominant in smaller-ticket products like two-wheeler and top-up health insurance, where speed matters more than anything else.

Earlier this year, credit cards had witnessed a subdued activity, however, as their usage grew as the festive season picked up. Data shows that term insurance payments via credit cards rose by about 21 per cent. The combination of reward points, cashback, and EMI options made credit cards attractive again.

Also, the average transaction size on credit cards went up slightly (by 2.14 per cent), a small but telling sign that people are comfortable paying bigger premiums digitally.

While UPI rules the instant-payment space, netbanking remains the trusted choice for longer-term or higher-value purchases. The data shows:

- Term insurance payments via netbanking grew 49 per cent, while investment-linked plans saw a 37 per cent rise during the same period. This shows how consumers perceive netbanking as more stable and formal, especially for large annual premiums or one-time lump-sum payments.

Though the long-term trend favors UPI and credit cards, debit cards are finding a niche role during festive periods too on the back of banks actively pushing discounts. Debit cards saw a modest 14 per cent rise, mostly due to banks’ cashback promotions and wallet linkages.

The report also notes a growing popularity of ‘monthly premium payments’ among consumers. For instance, health insurance premiums paid monthly surged by more than 300 per cent, and UPI Autopay now accounts for over half of such recurring transactions.

This represents a ‘subscription-style’ approach to financial products which is similar to how people pay for streaming services or credit card EMIs.

Motor and two-wheeler policies rode the festival wave wherein both segments saw about 17 per cent growth in UPI transactions, with banks’ reward campaigns and instant payment confirmations encouraging digital purchases.

The data notes that the link between festive buying and insurance renewals is stronger than ever.

As Policybazaar’s Head of Payments, Harsh Vardhan Masta, observed, consumers today are “consciously planning how to pay for insurance in ways that maximise convenience, rewards, and cash flow management.” The sentiment captures the broader trend, insurance is no longer a dull postscript to Diwali spending but part of it. People are perhaps treating financial protection the same way they treat festive shopping with due planning and digital upgrade.