India’s term insurance market began 2026 on a bullish note. Total first-year premiums for term plans hit ₹24,860 crore in February 2026, up 12% from January 2026, according to provisional IRDAI data released March 28, 2026. The surge came even as the Reserve Bank of India hiked the repo rate to 6.5% on February 6, 2026, a move that typically cools long-term financial commitments. Yet, term insurance—widely seen as India’s cheapest protection tool—defied the trend.
SBI Life claimed the top spot in March 2026 with 243,000 policies sold under its AI-driven ‘eShield Next’ plan. Between January 1 and March 25, 2026, the plan sold 695,000 policies, generating ₹3,240 crore in premiums alone. That’s a 7% lead over ICICI Prudential’s ‘iProtect Smart’, which sold 648,000 policies worth ₹2,980 crore in the same period. LIC’s ‘e-Term’ closed the gap with 592,000 policies and ₹2,750 crore, showing that legacy players still command trust.
The driving force isn’t inflation but awareness. On January 15, 2026, the government launched its ₹5,000 crore ‘Bharat Jeevan Jyoti Bima’ campaign in 200 districts to push term insurance among low-income families. The scheme offers ₹5 lakh cover for ₹400 a year. By February 28, 2026, over 42 lakh applications poured in—nearly double the 2024 target. Mumbai and Bengaluru contributed 280,000 sign-ups each, while UP’s Varanasi alone hit 156,000.
But costs are rising. The average term insurance premium per ₹1 crore cover in 2026 has climbed 9% over 2024 levels. HDFC Life now charges ₹7,890 per year for a 30-year-old male smoker, up from ₹7,230 in July 2024. LIC still offers ₹7,400, undercutting private peers by ₹500. The gap widens for higher sums assured: ICICI charges ₹18,900 for ₹3 crore cover, while SBI Life asks for ₹17,800.
Online channels drove 68% of these sales. Policybazaar’s March 2026 report showed ₹5,200 crore in term insurance sold digitally in Q1 2026—42% more than Q4 2025. The average buyer’s age dropped to 31.2 years, down from 33.7 years in 2024. Bengaluru led with a 39% share of online term policies, followed by Delhi (32%) and Mumbai (28%).
Rural markets lagged. Despite Bharat Jeevan Jyoti, only 14% of term policies in Q1 2026 originated from villages. Madhya Pradesh’s Jabalpur district showed the highest rural adoption at 18%, thanks to local agents leveraging WhatsApp advisory groups. Media reports from February 27, 2026, highlighted how 3,400 rural agents in 14 districts converted 15,000 leads into policies—up 40% from 2025.
Tax rules tightened mid-2025. The budget on July 23, 2025 axed the ₹1.5 lakh deduction under Section 80C for premiums over ₹50,000 annually. That move forced insurers to redesign products. SBI Life’s ‘eShield Next 2.0’, launched January 10, 2026, now caps tax benefits at ₹30,000 per year for high-net-worth buyers. ICICI Prudential followed suit on February 20, 2026, with similar capping.
Yet liquidity concerns tempered growth. On March 20, 2026, HDFC Life’s CEO Vibha Padalkar told Business Standard: *‘Voluntary surrender rates jumped 18% in Q4 2025 as buyers prioritised liquidity over protection.’* That’s the highest in seven quarters. Karnataka and Tamil Nadu accounted for the biggest surrenders—31% and 23% respectively—due to job cuts in IT and manufacturing sectors hit by RBI’s 6.5% rate.
For those hunting for terms, ICICI’s ‘iProtect Smart ₹1 crore at ₹7,499/year remains the best bet under IRDAI rules. LIC’s ‘e-Term’ offers ₹1.1 crore for ₹7,900/year, slightly cheaper than SBI Life’s ₹8,050 despite the lead in volumes. Go digitally and save 1.5% agent commission.
