Demand from non-metro areas has accelerated over the last 2 months.
Home loan insurance adoption in India has increased sevenfold over the past five months, driven by borrowers looking to secure their long-term financial liabilities independently of their lenders.
Metro cities currently account for 70% to 75% of total policy purchases, with Delhi NCR leading at 8% to 10%, followed by Mumbai at 5% to 7%, and Bengaluru, Lucknow, and Pune each contributing 3% to 5%, according to an analysis by Policybazaar.
However, demand from non-metro areas has started to accelerate over the last two months.
Borrowers aged between 31 and 45 years make up nearly 70% of all buyers.
Within this bracket, individuals aged 31 to 35 account for approximately 22%, those aged 36 to 40 make up 26%, and those aged 41 to 45 comprise around 23%.
Salaried professionals constitute 80% to 85% of the total buyer base, and a majority of the insured loans involve joint applications with spouses.
Higher loan values are directly linked to increased insurance penetration. Borrowers with loans between $5,500 (INR50 lakh) and $11,000 (INR1 crore) represent the largest segment at 40% to 45% of insured customers.
Meanwhile, 20% to 25% have loans above $11,000 (INR1 crore), 8% to 10% have loans of $22,000 (INR2 crore) or more, and approximately 4% to 5% have loan amounts exceeding $33,000 (INR3 crore).
The average insured loan amount sits between $5,500 (INR50 lakh) and $8,250 (INR75 lakh), with borrowers selecting an average repayment tenure of 12 to 15 years.
The analysis highlights a shift in consumer behaviour, as buyers increasingly view these policies as standalone protection tools rather than mandatory products bundled by banks.
Consumers are also opting for online channels due to pricing differences; purchasing home loan insurance online can be up to 72% more cost-efficient than offline alternatives over a 20-year tenure, aided by zero Goods and Services Tax (GST) on online policies.
Vivek Jain, Chief Business Officer of Life Insurance at Policybazaar, stated that customers are increasingly choosing to separate loan protection from their broader life insurance needs.
($1.00 = INR94.72)