India's life insurance industry is currently in a long growth cycle, with life insurance penetration still at just 2.8% versus 5.6% globally according to a new report by PL Capital.
A blog posted on the company website https://www.plindia.com said private players are expected to register a compounded annual growth rate of 14.5% in premiums up to financial year 2034-35.
The 80-page India Life Insurance – Rebalancing and aiming for growth report was published in September 2025. The report said this growth cycle will be supported by rising demand for protection, annuities, and guaranteed-return products.
“Low penetration, rising financialisaton of savings, and growing demand for guaranteed-return products will drive expansion. Private players with strong product innovation and distribution reach are best placed to capture this.”
As of 2021 the mortality protection gap in India was at $16.5tn (83%), leaving significant headroom for insurers to push term life, credit-protect and return-of-premium plans. While Unit Linked Insurance Policies gained traction in 2024-25, their share is expected to moderate as equity markets turn volatile. Growth is increasingly shifting towards non-par savings and annuity products.
Annuities, which today form just 2–8% of insurers’ product mix, have grown at 21–53% CAGR between 2019-2020 and 2024-2025. With India lacking formal social security, annuities are set to become an essential retirement planning tool. Regular-premium annuity plans, structured like SIPs, are gaining traction among customers in their 40s and 50s.
The report said the GST exemption on premiums from September 2025 is positive for customers but will cut insurers’ input tax credit, impacting embedded value by 20–100 basis points in 2025-2026. Similarly, new surrender value rules trimmed margins by 30–50 bps in 2024-25.
“Insurers have historically innovated their way through such challenges, and GST exemption should eventually improve penetration and persistency,” the report says.
According to PL Capital the Indian life insurance market is shaping up as a structural growth story. With penetration still low, annuities expanding rapidly, and protection products gaining traction, the sector offers steady double-digit growth potential.