Demand for home loan insurance in India has surged over the past five months, with metropolitan cities continuing to account for the majority of policy purchases even as interest from smaller towns and non-metro regions gains momentum, according to a new analysis by Policybazaar.
The report found that the adoption of home loan insurance has increased sevenfold during the period, reflecting a growing awareness among borrowers of the importance of protecting their families against outstanding mortgage liabilities. Rather than relying solely on insurance products offered by lenders, more homebuyers are opting for standalone policies that provide financial protection tailored to their individual needs.
Metro cities currently contribute between 70% and 75% of all home loan insurance purchases, highlighting the concentration of demand in India’s largest urban centres. Delhi National Capital Region (NCR) leads the market with an 8% to 10% share of total policy sales. Mumbai follows with 5% to 7%, while Bengaluru, Lucknow and Pune each account for between 3% and 5%.
Although metropolitan areas continue to dominate the market, the analysis points to a notable increase in demand from non-metro locations over the past two months. The trend suggests that awareness of financial protection products is gradually spreading beyond major cities as home ownership expands across Tier II and Tier III cities and other emerging urban centres.
The findings reflect a broader shift in consumer attitudes. Increasingly, borrowers are treating home loan insurance as a standalone financial planning tool rather than a product bundled with a housing loan by banks or financial institutions. Consumers are becoming more selective, comparing coverage options, costs and long-term benefits before making a purchase.
Age demographics also reveal a clear pattern in buying behaviour.
Nearly 70% of all home loan insurance buyers fall within the 31 to 45 age group. Borrowers aged 31 to 35 account for approximately 22% of customers, those between 36 and 40 make up around 26%, whilst individuals aged 41 to 45 contribute roughly 23%.
These figures indicate that demand is strongest among people in the peak of their earning years, when purchasing a home often coincides with growing family responsibilities and long-term financial commitments. At this stage of life, borrowers are typically balancing mortgage repayments with childcare, education expenses, retirement planning and support for ageing parents, making loan protection increasingly relevant.
The report also found that salaried professionals dominate the market, representing between 80% and 85% of all policyholders. Most insured home loans are joint applications involving spouses, reflecting the growing trend of shared home ownership and joint financial responsibility among married couples.
Loan size has also emerged as an important factor influencing insurance adoption. Borrowers with loans ranging from INR50 lakh to INR1 crore form the largest customer segment, accounting for between 40% and 45% of all insured loans.
Another 20% to 25% of policyholders have home loans exceeding INR1 crore. Loans valued at INR2 crore or more account for between 8% and 10% of customers, while approximately 4% to 5% have borrowed more than INR3 crore.
According to the analysis, the average insured home loan ranges between INR50 lakh and INR75 lakh, with borrowers generally selecting repayment tenures of between 12 and 15 years. These figures underline the long-term nature of housing finance and the importance many homeowners place on ensuring that their families would not be burdened with outstanding debt in the event of an unforeseen circumstance.
Digital platforms are also playing an increasingly significant role in shaping purchasing decisions. Consumers are turning to online channels because of both convenience and competitive pricing. Policybazaar estimates that purchasing home loan insurance online can be up to 72% more cost-effective than buying similar products through offline channels over a 20-year loan tenure. The cost advantage is enhanced by the absence of Goods and Services Tax (GST) on online policies, making them an attractive option for cost-conscious 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 depending on lender-provided cover, borrowers are seeking dedicated insurance solutions that better align with their financial goals and repayment obligations.
The analysis highlights an evolving insurance landscape in India, driven by rising financial awareness, expanding digital access and changing consumer preferences. Whilst metropolitan cities continue to account for the bulk of policy sales, the growing interest from non-metro regions suggests that the market is widening. As more Indians take on long-term housing loans, demand for independent home loan insurance is expected to remain strong, reflecting a broader emphasis on financial resilience and responsible long-term planning.