India’s life insurance sector is projected to grow at a compound annual rate of 14.5% till FY35, reflecting the rising importance of financial protection and long-term savings. This growth is driven by expanding financial inclusion, evolving customer preferences, and a growing middle class seeking reliable insurance and annuity products.

Despite steady expansion, life insurance penetration in India remains relatively low at 2.8% of GDP, compared with the global average of 5.6%. Insurance density, at roughly $70 per capita, also lags behind developed economies, indicating substantial room for growth. As India’s nominal GDP continues to rise at around 10.5% annually, households are expected to increasingly allocate savings toward insurance solutions, fueling sector expansion.

The demand for protection and annuity products is becoming more pronounced. Life expectancy gains, the absence of comprehensive social security, and a desire for guaranteed returns are driving interest in non-participating plans and annuity offerings. Meanwhile, Unit Linked Insurance Plans (ULIPs), which previously dominated, are expected to moderate in share as customers diversify toward products with assured benefits. The sector is also working to address India’s 83% protection gap, highlighting opportunities for insurers to expand their reach.

Distribution channels are evolving alongside product demand. Bancassurance remains a key contributor, accounting for 30–60% of sales, but insurers are increasingly leveraging agency networks and digital platforms to penetrate Tier-2 and Tier-3 cities. Regulatory changes, such as the GST exemption on life insurance premiums from September 2025, are expected to enhance affordability and broaden access, though insurers may need to adjust pricing and operations to maintain profitability.

With strong demand fundamentals, low penetration, and supportive policy measures, India’s life insurance industry is positioned for sustained double-digit growth over the next decade. Consumers’ rising awareness of protection needs, coupled with innovative products and wider distribution, is likely to drive this robust expansion, making the sector a key contributor to the country’s financial ecosystem.