India Has Been A Country Of Savings, Not Protection: Prashant Tripathy, Axis Max Life

For decades, life insurance in India has not really been about protection but ‘savings’. For generations, people bought policies that promised returns, bonuses, or maturity payouts, anything but the core promise of what life insurance is meant to do: provide security when the unexpected happens.

However, that story is slowly starting to change.

The latest edition of the India Protection Quotient (IPQ 7.0), released by Axis Max Life Insurance in partnership with research firm Kantar, highlights a clearer picture of where things stand in 2025.

According to the survey conducted across 6,360 households in 25 Indian cities, nearly 78 per cent of urban Indians now own some form of life insurance. But dig a little deeper, and you will see that only about a third of these policies are actually designed to provide real protection.

When adjusted for whether the sum assured is enough to support a family in crisis, the number drops even further to just 18–20 per cent.

So why the gap?

According to Prashant Tripathy, CEO and Managing Director of Axis Max Life Insurance, it’s a fundamental mindset issue. “India has been a country of savings, not protection,” he says. “Many people have got life insurance policies, but they have chosen more of savings (product) and not so much of protection.”

The heart of the problem lies in product preferences. A large number of individuals still opt for traditional endowment or investment-linked insurance plans. These offer maturity benefits but often fail to provide meaningful coverage in the event of death. Term insurance, designed purely for protection, remains under-penetrated.

The data from the IPQ 7.0 highlights how awareness and ownership patterns are changing, but also where the gaps still lie.

Term Insurance, the purest form of life protection, saw awareness rise from 70 per cent in IPQ 6.0 to 74 per cent in IPQ 7.0, with ownership growing modestly from 31 per cent to 34 per cent.

Savings-Oriented Insurance Products continue to dominate, with ownership increasing from 41 per cent to 44 per cent, despite only a marginal bump in awareness (69 per cent to 71 per cent).

ULIP Products showed the weakest traction. Awareness rose from 43 per cent to 46 per cent, but ownership remained low, inching up just two percentage points—from 14 per cent to 16 per cent.

The numbers show a core theme: term insurance, despite being the most effective form of financial protection, still sees sluggish uptake. The modest 3-point increase in ownership could be a factor of lingering hesitation among consumers.

A Shift in Priorities

However, Tripathy sees a silver lining, though. “People are becoming more informed. We are seeing an early shift in mindset where coverage is beginning to matter more than just returns,” he says.

The data shows an encouraging trend: consumers are increasingly valuing coverage over premiums. More Indians now understand that paying for a robust policy, one that truly protects, is not a loss but a lifeline.

How much coverage is adequate? As a benchmark, Tripathy recommends coverage of 8 to 10 times one’s annual income to ensure a basic level of financial protection for dependents.

Still, this awareness is mostly limited to urban populations, he further remarks. In rural India, the ownership of life insurance is drastically low, just around 12 per cent (as per IPQ 6). And within that, the share of protection-based products is even smaller.

“About 2 per cent of rural residents currently self-procure life insurance,” Tripathy underscores, emphasising that affordability remains a central issue.

Access and Affordability: The Missing Links

Even as awareness grows, access and affordability lag behind. Unlike banking or digital payments, insurance still feels complex and inaccessible to many, particularly in non-metro and rural areas.

The data shows that around 25 per cent of respondents now say they don’t have enough money to buy term insurance (up from 21 per cent in IPQ 6.0). This is a 4-percentage-point rise, which could also mean a growing financial stress or competing financial priorities of urban Indians.

Moreover, 28 per cent are affected by high premiums (up from 27 per cent last year) making it the second-highest reported reason people avoid buying term life insurance.

Other top barriers include:

• Never thought about life insurance at all (28 per cent)

• Prefer investing in other financial instruments (26 per cent)

• More inclined to buy health insurance (22 per cent)

Says Tripathy, “We need to simplify the product, reduce distribution costs, and build digital platforms that make insurance intuitive.”

To that end, the Insurance Regulatory and Development Authority of India’s (Irdai) recent initiatives like Bima Vistar and other digital aggregators are being developed to bridge this divide. “These platforms aim to offer simplified, affordable insurance products with easy comparisons and transparent processes, helping consumers, especially in underserved geographies, make better-informed decisions,” he states.

Underwriting and Trust: The Next Frontier

Another hurdle in expanding protection across the country is effective underwriting and fraud prevention. In rural areas, incomplete health and income data limit accurate risk assessments.

Financial underwriting remains patchy, and the risks of misrepresentation are higher. “This is not a small-ticket transaction,” says Tripathy, “and the trust factor is critical. We have to evolve our processes to build that.”

Digital tools can help, but so can deeper community engagement. By partnering with local organisations, insurers can reach more people, explain the value of protection, and reduce the dependence on traditional agents.

Looking Ahead

Tripathy remains optimistic about where the industry is headed. “We will need to reimagine life insurance for the next generation,” he says. The key lies in developing products that speak the language of younger, more informed consumers, offering protection that is comprehensive, easy to access, and aligned with their evolving life goals.

As India’s middle class expands and financial awareness deepens, the demand for meaningful protection, not just savings, is expected to grow. But the industry still has work to do. The shift from protection as an afterthought to a core financial priority is underway, but it will take sustained education, smarter distribution, and regulatory push to close the gap.

For now, the message is clear: India is no longer just a nation of savers. It’s learning the value of protection. And that might be the most important financial shift of all.