India’s insurance landscape is undergoing a major digital shift, with Unified Payments Interface (UPI) emerging as a preferred choice for millions. As financial habits evolve, UPI has now become the go-to method for one in three insurance premium payments, signaling a strong consumer trust in digital transactions for even high-value policies.
UPI Drives Growth Across Insurance Segments
According to Policybazaar‘s latest analysis, UPI usage for investment-linked insurance products surged by over 45% in FY25. This rapid adoption highlights a growing comfort among users with using UPI for sizable, recurring financial commitments. Health insurance premiums paid via UPI also rose sharply—by more than 34%—making up a full quarter of all payments in this category.
Meanwhile, term insurance saw a 25% increase in UPI transactions, with 36% of users opting for this method. Motor insurance retained its lead with nearly 50% of all premium payments made through UPI, reflecting continued user preference in the auto segment.
Credit Cards Make a Comeback, Net Banking Sees Unexpected Surge
While UPI leads the charge, credit cards are also experiencing renewed interest—especially in the term and investment-cum-insurance space. Term insurance recorded a remarkable 127% rise in credit card payments, while investment products skyrocketed nearly 300%. Consumers appear to be leveraging credit cards for their rewards programs and extended payment flexibility.
That said, credit card penetration remains modest in general insurance. Health insurance showed a 47% increase in credit card payments, but motor insurance only inched up by 7.2%. In contrast, net banking made a strong return, with term insurance payments growing by 290% and investment plans by 306%, nearly doubling its overall usage.
Digital Preferences Shift: Monthly Plans Rise, Debit Cards Drop
Digital premium payments overall rose 15% between January and March, largely due to increased use in term and investment plans, especially for tax planning. Among Non-Resident Indians (NRIs), credit cards remain dominant for health insurance purchases, although their usage dipped slightly from 61.25% to 57.53%. Interestingly, NRI debit card transactions increased from 38.75% to 42.47%, likely aided by smoother onboarding and regulatory easing.
Meanwhile, domestic debit card usage declined by 17% overall. Motor insurance saw the steepest fall at 61.6%, followed by term insurance (37.1%) and health insurance (38.8%). The only exception was investment-cum-insurance products, which saw a 41% increase in debit card usage.
Notably, monthly insurance premium plans are gaining traction. Health insurance led the way with a 307% spike in monthly payments, while investment and term insurance premiums jumped by 99% and 72%, respectively. This reflects a shift toward more affordable, bite-sized payment options that support long-term financial planning and budgeting habits.
As UPI and other digital platforms continue to dominate, the Indian insurance sector is clearly leaning into a future driven by convenience, flexibility, and consumer-centric innovation.