Life Insurance Plan | Best Life Insurance Plan

What is the Life Insurance Penetration in India?

Life insurance penetration in India shows how widely people buy life cover, reflecting awareness and financial protection across the population.

Written by : Knowledge Centre Team

2025-12-23

1887 Views

9 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Insurance has been one of the most useful financial support solutions, especially for emerging economies. However, the perception of insurance in a growing economy like India has been marred with misconceptions and a lack of awareness.

The year 2014 marked a significant milestone in insurance presence in India. The central government introduced multiple economic inclusion policies to bring the masses into the fold of financial protection. These progressive policies ultimately lead to personal accident and health insurance being available as social security schemes.

Insurance Penetration & Density in India

Quite often insurance is dismissed as a morbid product or thought rather than a product of financial safety. Another side of the perception is that it is something designed for the affluent.

Both sides of thinking ultimately leave a large section of the society prone to losing financial status due to contingencies like illnesses, untimely death or natural calamities.

Insurance penetration refers to the ratio of collected premium to GDP while density refers to per capital premium collection. Both measures indicate the acceptance and development level of the insurance market in any country. For India, these numbers stand at 2.82% and USD 58 for life insurance, while general insurance, which includes health insurance plans, stands at 0.94% and USD 19 per capita. (as per 2019-20 IRDAI Annual Report)

Although these numbers have been growing steadily over the years, India still ranks among the bottom 10 for these figures. Indicating that Indian markets have much farther to go and faster if we are to keep up with the world.

This applies to both general and life insurance plans.

Do You Need Insurance?

One of the biggest questions you could ask to postpone your insurance decision indefinitely is whether you need insurance. The answer should usually be yes. However, the next question is sure to stump you clean off the intended path.

importance of life insurance in financial planning

So, let’s first make the order of questions clear. The correct line of questions would go something like the following:

  1. What kind of insurance do I need?
  2. How much insurance should I have?

First of all, not everyone will need all different types of life or general insurance covers. For example, if you are an individual who is below 18 years of age, you may only need health insurance coverage.

Second, the amount of life, health, or general insurance cover you will need will depend on the following two factors:

  • Your financial status
  • The financial worth of your insurable assets

Thus, you can be more specific with your next line of queries, such as, ‘which insurance cover should I have?

Types of Insurance Plans

Technically speaking insurance plans only have two classifications. However, in common usage you will face three types of insurance plans:

  1. Life Insurance plans
  2. Health insurance plans
  3. General insurance plans like motor, house, etc.

Why do you Need a Life Insurance?

Life insurance need is one of the most complex to estimate. The first thing to understand is that the purpose of life cover is to protect your family and ‘their’ financial goals. Thus, an adequate life insurance cover will help you achieve:

  • Long-term financial safety for your family’s household (living) expenses
  • Pay-off ongoing debt
  • Save money to meet child’s important future goals

Although you may feel that you need multiple complex calculations to estimate the real financial safety need for your family, it is rather easy. If you have a regular income, you can easily estimate your eligibility. The source of income could be any, rental, interest income, salary, or business.

In general, a life cover of 10 to 15 times your annual income is sufficient to provide for the three factors for your family. For example, if your annual income is Rs. 10 lakhs, you can get a life cover between Rs 1 crore to Rs. 1.5 crores for the complete financial safety of your family.

Term Insurance & Other Protection Plans

However, you should know that for this purpose you only need a protection plan like term insurance cover, for the following reasons:

  1. Simple to understand and operate
  2. Inexpensive, i.e., even a single premium amount for a 30-year policy may be as low as 1% of the life cover amount for a 30-year-old.
  3. Can provide reliable and long-term regular income to your nominees. iSelect Smart360 Term Plan from Canara HSBC Life Insurance gives the option to divide the sum assured so that your family can receive inflation-adjusted regular income pay-out as well as the lump sum money.
  4. Easy to secure a large sum assured amount
  5. Adding other protection plans like accidental disability cover and terminal illness cover gives added safety to your family at a nominal additional cost

Few term policies like iSelect Smart360 Term Plan offer terminal illness cover as an inbuilt default cover with the term policy without any extra premium cost. Thus, the best term insurance policies can resolve your financial protection need for the family easily.

Other Plans for Other Purposes

While a term insurance plan is designed for protection, other life insurance plans serve other purposes and financial goals. For example:

1. Unit Linked Insurance Plans (ULIPs)

  • Gives multiple fund options for investment including equity funds
  • Use this plan to build wealth or meet any financial goal
  • Great for long-term financial goals
  • Can help you build a tax-free corpus

2. Child Plans or Child Education Plans

  • Perfect for investing in your child’s higher education and marriage goals.
  • Use the goal/premium protection feature to ensure that your child has the financial support you intended even after your untimely demise.
  • Usually, tax-free maturity, except in the case of ULIP plans where your annual investment is more than Rs. 2.5 lakhs. Then it will become a capital asset and taxed as such.

3. Pension or Annuity Plans

  • Designed to convert lump sum money into safe and long-term regular income
  • Help you generate pension after you retire or even before retirement

4. Endowment and Moneyback Plans

  • Safe long-term investments
  • Best for wealth preservation as the returns are tax-free and usually closely follow the inflation
  • Best for investing in important goals
  • Can also have a goal protection feature

Tax Saving in Life & Health Insurance

Life and health insurance plans also help you save tax. Almost all life insurance plans offer tax exemption and deduction under section 80C, so far as your investment into the plans follows:

  • Annual investment less than 10% of policy’s base sum assured
  • Annual investment less than Rs. 2.5 lakhs in case of ULIPs (for plans purchased on or after 1st Feb 2021, no limit for earlier plans)

Similarly, health insurance plans provide your tax-deduction opportunity under section 80D. The premium you pay can reduce your taxable income by up to Rs 1 lakh in a year.

  • Deduction for your family - self, spouse, children under 25 years of age
  • Deduction for your parents

The deduction limits are dependent on the age of insured persons:

  • Up to Rs. 25,000 if aged below 60
  • Up to Rs. 50,000, if 60 or above

Thus, using insurance can not only save you and your family from financial hardships due to mishaps but also give you tax benefits. Using correct and adequate life and health insurance plans will also help you look after your family’s future goals while protecting them from your untimely demise.

Get Life Cover Instantly

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

Life Insurance Policy Lapse: Impact, Risks and What You Can Do?
16 Jan '26
3003 Views
10 minute read
Know what a life insurance policy lapse means, why it happens, how it affects coverage and benefits, and the options available to restore protection.
Read More
Life Insurance
Best Investment Options with High Returns in 2026
10 Jan '26
9682 Views
16 minute read
Best Investment Options in India. Looking for investments to meet your long-term financial goals? Here are the best investment plans for the year 2026 in India.
Read More
Life Insurance
Have Multiple Life Insurance Policies? Things You Should Know
09 Jan '26
1290 Views
7 minute read
Is it legal to own multiple life insurance policies? Would it cause any problem in claim settlement? Discover your answers here.
Read More
Life Insurance
What is Survival Benefit in Life Insurance?
06 Jan '26
3234 Views
7 minute read
Learn about survival benefits in life insurance, how they work, and their key features. Understand eligibility and payouts with Canara HSBC Life Insurance.
Read More
Life Insurance
Types of Life Insurance: Which One is Best for You?
05 Jan '26
3118 Views
9 minute read
Learn about different types of life insurance policies with Canara HSBC Life Insurance. Discover the best plans in India in 2026 and know how to buy them online.
Read More
Life Insurance
Principle of Indemnity: Meaning, Concept, Example
05 Jan '26
4537 Views
11 minute read
Understand the Principle of Indemnity in insurance. Its meaning, concept, and real-life examples. Learn how it protects policyholders from financial loss.
Read More
Life Insurance
What Is a Joint Life Insurance Policy and How Does It Work?
31 Dec '25
1181 Views
10 minute read
A joint life policy is a single plan that covers both the wife and the husband whether both of them are earning or only one. Understand how it works, who it suits best, key benefits, payout structure, and important points to consider before choosing one.
Read More
Life Insurance
What Is Insurable Interest in Life Insurance?
31 Dec '25
2466 Views
11 minute read
Explains the meaning of insurable interest in life insurance, why it is required, who can have it, and how it affects policy validity and claims.
Read More
Life Insurance
9 Financial Resolutions to Become Money-Smart This Year
31 Dec '25
1282 Views
11 minute read
Buy the best life insurance plan and become financially fit. Learn 9 more different financial resolutions to make your year worthwhile.
Read More
Life Insurance

Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover