When it comes to paying insurance premiums these days, Indians have no shortage of digital options. But beyond the convenience, there is a noticeable shift in how people are choosing to pay, based on the type of insurance, timing, and even their comfort with digital tools.
A recent data from Policybazaar.com, an online insurance marketplace, from the financial year (FY) 2025 shows a maturing market where UPI has a mode of payment that is growing, credit cards are being used more tactically, and even old-school net banking is seeing fresh interest. Each mode is carving out its own space, and consumers are clearly picking what works best for them.
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UPI Moves Beyond Everyday Use
Most of us are used to pulling out our phones and using UPI for groceries, cab rides, and food deliveries. But increasingly, people are turning to UPI for big-ticket insurance payments too.
This year, UPI made up almost 34 per cent of insurance premium payments on one leading platform, up from 28 per cent the previous year.
What Type Of Insurance Payments Are Being Made Via UPI
Among all, Insurance-cum-investment products have seen the highest surge in UPI usage, with a growth of over 45 per cent. This shows the increasing level of consumer comfort in using UPI for high-value, long-term financial commitments, not just everyday transactions.
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Health insurance followed closely, with UPI payments rising over 34 per cent, and now accounting for a quarter (25 per cent) of all premium payments in the category. Debit card usage in this segment shows a 40 per cent decline, suggesting more customers are now seeking benefits via credit cards or UPI.
Term insurance, which is still an underpenetrated category in India, recorded a 25 per cent growth in UPI payments. However, it is important to note here that 36 per cent of all term insurance premiums are now paid through UPI.
This shows that even in products with low adoption, UPI continues to the most preferred payment mode.
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Motor insurance, which according to the report is the most UPI-penetrated category, recorded a more modest 15 per cent growth. But this needs to be seen in the context of nearly 50 per cent of all motor premiums already being paid through UPI in FY25, which makes it the category with the highest UPI uptake overall.
Credit Cards Are Back
While UPI has been steadily climbing, credit cards have made a very noticeable comeback. This is particularly more visible in higher-value segments like term and investment-cum-insurance products.
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What stands out is the sheer scale: credit card payments for term insurance surged by 127 per cent, and in investment-cum-insurance, usage shot up by nearly 300 per cent year-on-year.
That’s a massive jump, and suggests that more people are using credit cards to access rewards, defer payments, or simply manage cash flows more effectively.
For general insurance products like health and motor insurance, credit card usage did go up too, but not by as much, about 47 per cent for health and just 7 per cent for motor. It seems consumers are leaning on cards where the ticket size is bigger and there's more potential to gain from the extra benefits they offer.
Net banking also saw a massive surge, wherein:
Term insurance via net banking grew by over 290 per cent
Investment plans by over 306 per cent
Overall net banking usage saw nearly two-fold jump
Among Non-resident Indians (NRIs), credit still reigns but preferences are shifting. They continue to rely mostly on credit cards to pay for insurance, for instance around 74 per cent of NRI health insurance payments were made this way.
A Clear Tax Season Spike
Digital insurance payments typically see a boost between January and March, and this year was no exception. The final quarter saw a 15 per cent spike, mostly driven by term and investment policies, which qualify for tax benefits under Section 80C.
The seasonal surge is familiar, but it reinforces how closely insurance buying still ties into tax planning for many consumers.
Monthly Mode Becoming The New Normal
The data notes that monthly premium payments, particularly in health insurance, have seen a spike.
The number of people opting to pay monthly for health cover jumped by around 307 per cent.
It’s easy to see why. As health insurance gets pricier, monthly payments offer breathing room, making it easier to stay covered without feeling the pinch all at once.
Investment-cum-insurance plans also saw a 99 per cent rise in monthly mode, and term insurance followed with 72 per cent growth. Clearly, many now see insurance premiums more like EMIs or SIPs, regular, manageable, and better aligned with monthly budgets.
What Does This Tell Us
The data reflects that people are mixing and matching based on convenience, rewards, cash flow, and policy type.
It is less about what payment method is available and more about what fits best for the individual. In that sense, the way we pay for insurance today feels less like a transaction and more like a financial decision.
