More Self-Employed Buying Term Plans As Insurers Tweak Documentation Process For Non-Salaried

There's a quiet but noticeable shift taking place in India’s insurance sector, one that concerns the self-employed professionals.

According to data shared by PolicyBazaar, an online insurance marketplace, there has been a 58 per cent surge in term insurance purchases among the self-employed individuals in financial year (FY) 2025.

The shift, driven by ease of access, is a reflection of changing perceptions of people around financial security, and younger generations taking their long-term planning seriously.

The data reveals that 88 per cent of these buyers belong to the Millennial and Gen Z segments. These are individuals who are just entering their professional life or expanding their businesses. They belong to the group who have traditionally struggled to access life insurance because they couldn’t furnish salary slips or income tax returns.

What Changes Have Improved this Accessibility

However, with the rise of digitally underwritten plans, that hurdle is being removed.

The report adds: “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 income tax returns (ITRs) or salary slips.”

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.

Many insurers are now evaluating financial stability using alternative metrics like credit scores, loan history, and surrogate proofs such as vehicle Insured Declared Value (IDV).

As such, now, more self-employed professionals are insurable, and they are buying in significant numbers as well.

Rise in Women Term Buyers

Another striking development is the rise in women term insurance buyers in this segment. The share of women buyers has grown from 9 per cent in FY 2020 to 15 per cent in FY 2025.

One probable reason could be the increasing financial awareness and control that women are gaining over their finances. This trend is more prominent in key metro areas where businesses led by women are growing.

Increase in Coverage Amount

Though the coverage amount of Rs 50 lakh remains to be the most popular choice, data shows there’s a shift happening towards higher coverage amounts, too.

Now, coverage of Rs 1 crore and above is growing at a faster pace, driven by rising costs of living, inflation, and an evolving understanding of what it really takes to protect a family financially.

Additionally, more people are now preferring ‘monthly premium payments’ which allow for better cash flow management. This is an important factor for self-employed individuals whose income may vary from month to month.

Top Cities Where Term Plans Are a Hit

Metro cities, such as Delhi, Mumbai, and Bengaluru continue to lead in terms of demand for term insurance among self-employed individuals, the data shows.

However, cities like Pune, Hyderabad, and Chennai are also catching up quickly. This is because of a growing population of small business owners and independent professionals who are looking for affordable coverage options.

What are the popular Add-Ons

Accidental Death Benefit and Waiver of Premium riders are among the highest-selling add-on coverages for self-employed term insurance purchasers.

These riders serve as added protection, ensuring policyholder's families and businesses are not left bereft in the case of a sudden accident.

The self-employed persons also have the choice of covering themselves with the Married Women's Property Act (MWPA) as well.

Says Varun Agarwal, head of term Insurance at Policybazaar.com, “As India's self-employed population expands rapidly, the demand for term insurance among this group is set to rise significantly.”

He adds that insurers are now doing away with the traditional barriers. Instead, they are employing digital metrics to assess the financial stability of self-employed groups.

With more young professionals and entrepreneurs thinking long-term, insurers are now also tailoring their products to suit customer preferences.