India is home to several households where a single income often supports an entire family or even generations. Life insurance is one of the most important financial tools for protecting household income, with term insurance remaining its simplest and most affordable form. Yet, despite widespread awareness about its importance, India continues to remain significantly under-protected. Millions of households still either do not have adequate term cover or postpone purchasing it altogether.
And it is not always about the lack of intent. More often than not, it is a combination of affordability concerns, complicated underwriting, documentation fatigue, and the perception that term life insurance is difficult to buy.
Technology, digital distribution, and data-led underwriting are reshaping how insurance is bought, assessed, and priced in India. These shifts are beginning to reshape the broader life insurance ecosystem, although their impact is perhaps most visible in term insurance, where underwriting has the greatest influence on pricing.
More importantly, these innovations are helping the industry address one of its biggest structural challenges, which is affordability. Instead of calculating the premium based solely on manual evaluations and broad risk categories, insurers today increasingly use AI-led underwriting models which can make accurate predictions about future risk based on the customers’ digital medical records, prescription history analysis, and behavioural data signals.
What this means is that instead of having a generalised pricing for every consumer, insurance companies are now moving towards more individualised risk assessment.
India’s Digital Public Infrastructure has strengthened this shift. Consent-based e-KYC, the Account Aggregator framework and the gradual expansion of digital health records are giving insurers access to richer, verified data with customer consent, reducing both friction and underwriting uncertainty.
As a result, healthy customers with stable financial behaviour and low-risk lifestyle indicators can often receive faster approvals and more competitive premiums than they would have under older underwriting systems. In many cases, insurers are now able to issue policies instantly or within hours instead of weeks. Better underwriting improves not just affordability, but portfolio quality, enabling insurers to grow sustainably without compromising on risk selection.
One of the most important developments driving this change has been accelerated underwriting. Rather than requiring every customer to undergo extensive medical testing, insurers now use intelligent triaging systems to identify low-risk applicants who may qualify for simplified or no-medical issuance. This significantly reduces friction for customers while also lowering operational costs for insurers.
As India’s health data ecosystem matures, interoperable digital health records could further reduce the need for repetitive medical tests and documentation, making underwriting faster while improving risk assessment quality.
With lower servicing and acquisition costs caused by digital underwriting, pricing is becoming better and more efficient, resulting in meaningful improvement in affordability.
Historically, life insurers often priced products conservatively because they had limited visibility into individual risk profiles.
A lack of granular data meant that large customer pools were grouped together, with lower-risk individuals effectively subsidising higher-risk segments.
Digital underwriting is changing this equation. AI-led risk engines today assess hundreds of data points, from medical declarations and prescription histories to occupation profiles and financial behaviour, to arrive at a more nuanced assessment of mortality risk. This enables insurers to move away from one-size-fits-all pricing towards far sharper risk segmentation.
The impact is already visible. Women, for instance, typically enjoy significantly lower term insurance premiums than men because of their relatively higher life expectancy. Improved underwriting and richer actuarial data have enabled insurers to price this difference more accurately, with women often paying 15-30% lower premiums for similar covers. Similarly, non-smokers and individuals with favourable health profiles are increasingly benefiting from preferential pricing that would have been difficult under traditional underwriting models.
(The writer is Chief Business Officer, Life Insurance, Policybazaar)
Published – July 13, 2026 06:00 am IST
