India’s self-employed professionals are increasingly turning to term insurance as a means of securing their financial future. According to recent data from Policybazaar, term insurance purchases have skyrocketed by 58% in FY25, with self-employed individuals leading the charge. This surge can be attributed primarily to younger generations, particularly Millennials and Gen Z, who are embracing financial protection at an unprecedented pace. Now, these two generations account for an astounding 88% of self-employed term insurance buyers.

The trend highlights a growing awareness and need for financial security among self-employed individuals, many of whom do not have the benefits of employer-sponsored insurance. As these groups expand their earning potential, they are increasingly turning to term insurance to protect their families and businesses in the event of an unexpected tragedy.

Rise in Term Insurance Demand Among Millennials and Gen Z

Millennials and Gen Z have always been seen as more digitally savvy and open to innovative financial solutions. This inclination toward technology has extended to insurance as well. The 58% surge in term insurance purchases among the self-employed can largely be attributed to these younger generations who are more inclined to seek financial security through customized plans.

Self-employed individuals, especially those in professions like freelancing, consulting, and small businesses, are increasingly investing in policies that offer more substantial coverage. Policies with a cover ranging from Rs 50 lakh to Rs 1 crore are witnessing higher uptake, driven by rising living costs, inflation, and greater financial literacy. The need for higher coverage is a natural response to economic uncertainty, ensuring that families and businesses are financially protected even in the event of a breadwinner’s untimely demise.

Shift Toward Higher Coverage and Flexible Payment Options

A notable trend emerging from Policybazaar’s data is the shift toward policies that offer higher coverage. While Rs 50 lakh policies still remain the most popular among self-employed individuals, there is a growing demand for policies that cover Rs 1 crore or more. The need for larger sums is reflective of the increased cost of living and the rising awareness among individuals about the importance of having a financial safety net.

Another key takeaway from the data is the shift toward monthly premium payments, which are becoming increasingly popular. Self-employed individuals are prioritizing cash flow flexibility, opting for monthly payments that can fit into their budget more comfortably. This preference reflects a broader change in the way financial products are being structured and consumed, as more individuals seek the ability to make smaller, more manageable payments instead of lump sum yearly premiums.

Growth in Women Buyers

The participation of women in term insurance has also seen a significant rise. Women now account for 15% of self-employed term insurance buyers, up from just 9% in FY20. This change reflects the growing number of women-led start-ups and an overall increase in the financial independence of women. As more women enter entrepreneurial ventures and self-employment, they are recognizing the importance of financial protection for themselves and their families.

This shift is being seen as a result of changing societal norms, where women are more likely to consider and adopt financial products that safeguard their long-term financial security. Additionally, women are increasingly opting for customized plans that reflect their unique needs, adding to the broader trend of term insurance growth.

Top Cities Leading the Demand for Term Insurance

The demand for term insurance among the self-employed is not limited to a particular region. However, cities like Delhi, Bengaluru, and Mumbai continue to lead in terms of self-employed term insurance purchases. These urban centers have long been hubs for entrepreneurs and self-employed professionals, making them natural hotbeds for insurance purchases.

In addition to these traditional markets, cities like Pune, Hyderabad, and Chennai are emerging as new hotspots. These cities are seeing an increasing number of small business owners and self-practicing professionals, such as doctors and consultants, looking for affordable coverage. The rise of these new centers of demand signals a shift towards a more nationwide trend in insurance adoption, driven by the needs of India’s expanding self-employed workforce.

The Role of Digital Insurance Solutions

One of the most significant factors contributing to this surge in term insurance among the self-employed is the rise of digital insurance solutions. Traditional barriers to purchasing insurance, such as the need for income documentation (e.g., ITRs or salary slips), have been eliminated. Instead, insurers are increasingly evaluating an individual’s financial stability using digital metrics like creditworthiness, loan history, and even surrogate proofs, such as vehicle IDV (insured declared value) or the current market value of assets.

This shift towards digitized evaluation has made it easier for self-employed professionals to secure coverage without the complex paperwork that was once associated with traditional insurance policies. This move is particularly beneficial for younger, tech-savvy self-employed individuals who prefer quick, hassle-free services.

Conclusion

The surge in term insurance purchases by India’s self-employed professionals is part of a broader trend towards financial self-sufficiency and security. Millennials and Gen Z, in particular, are at the forefront of this movement, with many opting for higher coverage policies, greater payment flexibility, and additional features like Accidental Death Benefits and Waiver of Premium.

The rise of women entrepreneurs, the growing demand for customized term plans, and the increasing importance of digital insurance solutions are transforming the way insurance is bought and sold in India. With a more educated and tech-savvy workforce, the future of term insurance in India looks promising, with continued growth expected as more self-employed individuals recognize the need for long-term financial protection.

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