Coverage Vs Premium Cost: What Most Urban Indians Value? Survey Reveals

In a telling sign of shifting financial priorities, three out of four urban Indians now say they would rather buy life insurance policies that offer higher coverage, even if it means paying more for premiums. This marks a clear departure from years of price-sensitive behaviour, according to findings from the latest India Protection Quotient (IPQ) 7.0 survey by Axis Max Life Insurance in collaboration with Kantar.

The survey, conducted across 6,360 households in 25 Indian cities, shows that urban India's financial awareness and insurance ownership are both at record highs. Life insurance ownership has climbed to 78 per cent, the highest since the annual survey began in 2019. For the first time in seven years, 'coverage' has overtaken 'cost' as the primary factor driving term insurance purchases.

The shift is a reflection of the changing mindset of India, where urban households are now focusing more on long-term financial protection than merely saving on monthly premiums. Says Prashant Tripathy, CEO and MD, Axis Max Life Insurance, "This year's record Protection Quotient, alongside all-time high life insurance ownership, reflects a decisive shift in consumer priorities, from cost sensitivity to genuine protection needs." 

Here's what the data says:

The IPQ, a metric used to measure financial preparedness, has jumped from 35 in 2019 to 48 in 2024. This shows consistent progress in urban India's financial resilience.

The survey also found that 56 per cent of respondents believe their current term plan is adequate to secure their families' future.

Post Covid-19 pandemic, urban India's financial security level has also rebounded to 68 per cent. This has far exceeded the pre-Covid levels for the first time since the pandemic disrupted income flows and economic planning.

Understandably, the metro regions have shown the highest Protection Quotient, while tier 1 and tier 2 cities have shown improvement. Life insurance ownership in Tier 2 cities rose from 62 per cent last year to 66 per cent, a slight but visible growth in terms of insurance penetration beyond traditional urban cores.

What is driving people towards financial security?

As per the data, for many families, insurance and savings are increasingly driven by long-term goals such as:

• Children's education (61 per cent)

• Marriage (44 per cent)

• Retirement planning (37 per cent)

• Buying a home (36 per cent)

Awareness and Online Purchases

While awareness about term insurance rose 74 per cent, one in four respondents still say high premiums are a major deterrent for them when it comes to buying insurance. Those saying they lack funds to buy a plan increased from 21 per cent last year to 25 per cent this year.

Online channels, however, are helping people bridge this gap. Digital adoption to buy term plans also surged (from 18 per cent to 22 per cent) wherein buyers are majorly attracted by affordability, easy comparisons, and quicker transactions.

What are the gaps?

Despite the gains, some disparities are evident. Working women's Protection Quotient remains flat at 48, compared to a 3-point jump among working men. Women reported lower confidence in planning for key life events and higher anxieties about inflation and financial loss due to a breadwinner's death.

Salaried individuals continue to lead with a Protection Quotient of 52, whereas the self-employed showed only marginal improvements and a drop in savings ability. Among regions, South India remains the most financially prepared, but the East lags behind despite improving awareness.

On the good note, however, there's a positive trend visible among younger age groups. Data shows that Gen Z are actively embracing life insurance with enthusiasm. Many Gen Zs are showing a strong intent to build on their mid-term goals in life such as wanting to buy a house, car or even planning for vacations.

Overall, the data shows that urban India's relationship with life insurance is maturing wherein the focus has moved from bargain hunting to building meaningful protection.