Year 2025 was remarkable for insurance with some great regulatory milestones, including the zero GST reform and for Indians as they started seeing insurance as a foundational decision for financial planning rather than borne out of need to save tax.

This pattern was consciously visible across health and travel cover and even the way people paid for it. Across these verticals, buyers moved towards higher covers, longer policy tenures and broader protection, while payment behaviour showed growing comfort with recurring, automated premium commitments.

Shift to meaningful protection

With the removal of GST on individual health cover, policyholders decided to invest savings into securing a larger cover reflecting the positive change this reform brought to policyholders. Average sum insured jumped by 31%, from ₹14.5 lakh to ₹19 lakh. Tellingly, policies below ₹10 lakh saw a sharp dip of 29% YoY and a 24% slide post GST, whereas covers in the ₹10-25 lakh bracket surged by about 45%. In fact, cover above ₹25 lakh nearly doubled.

This showed Indians became more aware of healthcare inflation and treatment realities. Unlimited health plans, a niche segment a year ago, accounted for a meaningful share of purchases of about 16% in 2025.

Perhaps the most significant trend is the move towards longer tenures. with 4- and 5-year tenures increasing by 56% and 62%, each clearly showing consumers’ preference for continuity over annual decision fatigue.

The awareness is deepening well beyond metros with tier-3 cities now accounting for a dominant share (70%) of health cover purchases. Younger buyers, too, are entering earlier, choosing stronger covers and add-ons such as Day 1 benefits and OPD riders.

Travel insurance

A similar transformation in consumer behaviour was seen in travel cover as well with a 15% YoY growth in policy issuance. It was also observed higher sum insured selections was the norm.

People traveling to the U.S. and Canada increasingly opted for covers as high as $5,00,000, acknowledging the realities of overseas healthcare costs. For Europe, Asia and other regions, $2,50,000 emerged as the preferred safety net. The reason for such covers is explained by the claims data. While the most frequent claims included baggage delays and trip disruptions, it was medical emergencies that continued to prevail claim value. After all, a single hospitalisation abroad can outweigh the cost of an entire trip. The spike in coverage is explained by the rise in the number of senior travellers who constituted 15% of insured travellers.

Payments: backbone of insurance

In 2025, UPI firmly emerged as the default mode, accounting for almost two-thirds of all premium payments. UPI Autopay registrations also rose and recorded around 1.5 million new registrations. This showed consumers are increasingly comfortable treating insurance like a subscription service rather than a one-time transaction. This was especially visible in life insurance where monthly payments dominated at 94% while annual payments accounted for only about 5%. In health cover, buyers were split with 61% opting for annual payments, and 35% choosing monthly.

Emergence of Buy-Now-Pay-Later for insurance premiums showed a subtle shift indicating rising demand for short-term liquidity support without the traditional credit friction. Besides, a spike of about 15% in purchases on GST exemption and the sharp rise in festive periods showed insurance decisions still influenced by timing. Regulatory relief, rising medical costs and digital-first payment rails together pushed buyers towards higher protection, longer tenures and frictionless ways to pay. 2025 firmly cemented the fact that insurance is moving away from being an impulsive purchase to being a conscious choice towards financial stability.

(The writer is Chief Business Officer, General Insurance, Policybazaar.com)