India Is Outpacing China At Life Premium Growth, Says Report

India's life insurance market is growing faster than that of China and will be Asia's second-largest life insurance market by 2035, overtaking Japan. India's life insurance market is projected to grow at 10.5 per cent annually for the next 10 years versus China's 7.8 per cent, according to the Allianz Global Insurance Report 2025.

This aggressive expansion is an indicator of rising household incomes, under-penetrated insurance, and increasing demand for long-term financial planning given the paucity of social security in India.

Strong Demand Fuelled By Retirement Needs

India's rapidly growing middle class is increasingly aware of the need to save for retirement and long-term financial security. India does not have a wide public pension system that is characteristic of most other developed countries. Workers, especially those in the informal sector, depend largely on personal savings or private products like life insurance to amass retirement assets.

"Indian families are increasingly viewing life insurance as a two-in-one tool—for protection and future saving, respectively," the report stated. Rising life expectancy and lifestyle changes are also fuelling demand, with people planning for financial security in the future more and more.

Insurance Still Under-Penetrated

While growth has been rising, insurance remains under-penetrated in India. India's life insurance penetration was just 2.7 per cent of GDP in 2024, compared with 4.3 per cent for Asia overall and 6.0 per cent for France. This leaves immense scope for development, especially in the rural and semi-urban regions.

In comparison to this, China's life insurance industry is already advanced with penetration at 2.4 per cent. While it will continue to grow in terms of size, India's lower base and stronger local drivers give it a higher growth curve.

According to Allianz, premium earnings from life insurance in India in 2024 were Rs 8.4 lakh crore (EUR 102.8 billion), and China had over Rs 34 lakh crore (EUR 422.3 billion). However, by 2035, India will narrow this difference significantly.

Digital Push Is Helping

The application of digital technologies is also fuelling India's insurance growth. Government-backed digital infrastructure in the form of Aadhaar and UPI, mobile applications, and online platforms enabled insurers to access and service customers in rural India.

Government initiatives such as Jan Dhan Yojana and PM Jeevan Jyoti Bima Yojana have also enhanced the awareness level for life insurance in the low-income and unbanked segment.

Shift In Product Preferences

While the savings plans and traditional endowment plans are still the favoured ones, there is growing interest in term assurance as well as unit-linked insurance plans (ULIPs). Pure life cover term plans without any maturity benefit are becoming favourites among young purchasers due to their low expense.

ULIPs are gaining popularity with investors who look for a blend of insurance and exposure to the market, especially from urban working professionals. Trends depict a shift in consumer behaviour from buying insurance just for tax benefits to using it as a means of protection and investment.

Asia is now the largest life insurance market, and China, South Korea and Japan are driving it. But the rise of India may upset the regional balance. More than half of the world's future life insurance premium growth over the next decade will come from Asia—and India will contribute importantly to that, Allianz predicts.