Demand for home loan insurance in India has risen sharply over the past five months, with metropolitan cities continuing to dominate policy purchases even as interest from smaller towns and non-metro regions gathers pace, according to a new analysis by Policybazaar.
The study found that the adoption of home loan insurance has increased sevenfold during the period, reflecting a growing awareness among borrowers of the need to protect their families from outstanding mortgage liabilities. Rather than relying solely on insurance products offered by lenders, more homebuyers are actively choosing standalone policies tailored to their individual financial needs.
Metro cities currently account for between 70% and 75% of all home loan insurance purchases, underscoring the concentration of demand in India’s largest urban centres. Delhi National Capital Region (NCR) leads the market, contributing between 8% and 10% of total policy sales. Mumbai follows with a share of 5% to 7%, while Bengaluru, Lucknow and Pune each account for between 3% and 5%.
Although metropolitan areas remain the dominant market, the report indicates that demand from non-metro locations has accelerated noticeably over the past two months. This trend suggests that awareness of financial protection products is spreading beyond major cities as home ownership expands across smaller urban centres and semi-urban areas.
The findings point to a broader change in consumer behaviour. Borrowers are increasingly viewing home loan insurance as an important financial safeguard rather than as an add-on product bundled with housing finance by banks or lending institutions. Instead of purchasing insurance simply because it is offered alongside a mortgage, many consumers are making independent decisions based on coverage, cost and long-term financial security.
Age also plays a significant role in purchasing patterns.
Borrowers between the ages of 31 and 45 account for nearly 70% of all home loan insurance buyers. Within this group, individuals aged 31 to 35 represent around 22% of customers, those aged 36 to 40 account for approximately 26%, and borrowers aged between 41 and 45 contribute about 23%.
The data indicates that demand is strongest among people in the prime years of their professional careers, when many are purchasing family homes and taking on long-term financial commitments. At this stage of life, borrowers are often balancing mortgage repayments alongside other responsibilities such as raising children, supporting parents and planning for retirement, making financial protection increasingly important.
The analysis also found that salaried professionals dominate the market, accounting for between 80% and 85% of all policyholders. A majority of insured home loans are taken jointly with spouses, reflecting the common practice of shared home ownership and joint financial responsibility among married couples.
Loan size appears to have a direct influence on insurance uptake. Borrowers with home loans ranging between INR50 lakh and INR1 crore make up the largest customer segment, representing between 40% and 45% of all insured loans.
Another 20% to 25% of policyholders have borrowed more than INR1 crore. Loans of at least INR2 crore account for 8% to 10% of insured customers, while approximately 4% to 5% have home loans exceeding INR3 crore.
According to the report, the average insured home loan falls between INR50 lakh and INR75 lakh, with borrowers typically selecting repayment periods of between 12 and 15 years. These figures reflect the long-term nature of housing finance and the importance many borrowers place on ensuring that outstanding debts can be managed even in the event of unforeseen circumstances.
The growing popularity of digital platforms has also influenced buying behaviour. Consumers are increasingly choosing to purchase home loan insurance online, attracted by both convenience and lower costs. Policybazaar estimates that buying a policy through online channels can be up to 72% more cost-effective than purchasing comparable products offline over a 20-year repayment period. The price advantage is further supported by the absence of Goods and Services Tax (GST) on online policies, making them a more affordable option for many borrowers.
Commenting on the findings, Vivek Jain, Chief Business Officer for Life Insurance at Policybazaar, said customers are increasingly separating home loan protection from their broader life insurance planning. Rather than relying on lender-provided products, borrowers are seeking specialised insurance solutions that better match their financial goals and repayment obligations.
The analysis highlights an evolving insurance landscape in India, where rising financial awareness, digital distribution channels and changing consumer preferences are reshaping the home loan protection market. While metropolitan cities continue to generate the bulk of policy sales, the recent rise in demand from non-metro regions suggests that the market is broadening, with more borrowers recognising the value of protecting one of their largest long-term financial commitments.
