Insurance buyers increasingly compare plans to cut premiums, improve coverage: Policybazaar

Indian consumers are increasingly comparing multiple insurance plans before making a purchase, helping them secure lower premiums and better coverage as digital platforms improve price transparency, according to data shared by Policybazaar.

The findings suggest that customers across health, term, and motor insurance are moving away from single-quote purchases and evaluating multiple plans to balance affordability with protection. The trend is also prompting insurers to compete more aggressively on pricing, product features and customer experience.

Health insurance: Comparing plans cuts premiums by around 20%

Policybazaar's data shows that premiums for similar health insurance profiles can vary significantly across insurers.

For instance, a ₹10 lakh family floater policy for a young family of three in Delhi costs between ₹773 and ₹2,426 per month, reflecting a nearly 68% difference. For a 62-year-old couple in Delhi with pre-existing medical conditions, monthly premiums range from ₹2,423 to ₹5,562, a variation of almost 60%.

Nearly 75% of customers now compare at least three health insurance plans before making a purchase. On average, customers who compare extensively settle for policies costing around ₹25,000 annually, while those who do not compare typically opt for plans priced closer to ₹30,000, indicating an average premium difference of around 20%.

The company said first-time buyers tend to focus primarily on reducing premiums, while repeat buyers pay greater attention to product features, claims experience and long-term value. Across both segments, customers commonly adjust features such as hospital network, deductibles, co-pay provisions and room rent limits to align premiums with their budgets.

Comparison activity is highest among customers aged 28-45 years, particularly families.

Sarbvir Singh, Joint Group CEO of PB Fintech, said greater access to multiple insurance options is reducing information asymmetry in the sector. "When customers can evaluate multiple options together, it brings greater clarity to pricing. As search costs decline through digital comparison, customers can identify plans that better match their needs and budgets. Over time, this encourages more competitive pricing and more responsive product design across the market," he said.

Policybazaar noted that with medical inflation estimated at 14-15%, digital comparison tools are helping families maintain adequate health coverage without a proportionate increase in out-of-pocket expenses.

Term insurance: More buyers evaluating multiple plans

The report also highlights growing comparison-led behaviour in the term insurance segment. More than 40% of customers now compare three or more plans before purchase, up from 32% in 2023.

Premium differences for similar customer profiles remain substantial. For a 30-year-old salaried non-smoker seeking ₹1 crore life cover until age 60, monthly premiums range from around ₹635 to ₹958. For a 35-year-old married parent seeking ₹2 crore cover, premiums range from ₹1,338 to ₹2,165 per month. Among women buyers, monthly premiums for a ₹1 crore cover range from ₹551 to ₹812 for a 30-year-old applicant and from ₹633 to ₹975 for a 35-year-old customer.

According to the company, customers comparing plans can lower first-year premiums by nearly 30% for similar protection profiles.

Claim settlement indicators remain the most influential factor in purchase decisions, followed by coverage amount, rider benefits, value-added features and the sum assured-to-premium ratio.

The company also observed that customers often opt for higher life cover after discovering that the additional premium required is relatively small when comparing different coverage levels. Users from Tier-II and Tier-III cities tend to compare more extensively before purchasing term insurance, while comparison activity is highest among customers aged 30-35 years.

Motor insurance: Comparing plans can save up to ₹30,000

Policybazaar's data also points to significant savings in motor insurance through plan comparison. Premiums for a three-year-old car valued at ₹10 lakh with add-ons such as zero depreciation and roadside assistance can range between ₹12,000 and ₹25,000. For a similar vehicle worth ₹20 lakh, premiums vary from ₹15,000 to ₹35,000.

On average, customers comparing multiple policies save around ₹8,000 on older vehicles and up to ₹30,000 on newer vehicles compared with buyers selecting the first available option.

Nearly 70-75% of motor insurance buyers now evaluate at least three plans before purchasing, with customers who compare extensively paying premiums that are typically 15-20% lower.

While first-time buyers remain highly price-sensitive, repeat customers increasingly assess trade-offs between premiums and coverage. Buyers are generally willing to pay more for add-ons such as Zero Depreciation, Invoice Cover, Battery Cover and Engine Cover, while Roadside Assistance, Key Lock Cover and Loss of Personal Belongings Cover are among the features most frequently dropped to lower premiums.

Beyond price, claim settlement experience, cashless garage network, insured declared value (IDV), brand reputation and claims convenience have emerged as key decision-making factors. The company said customers in Tier-II and Tier-III markets are more responsive to advisor-assisted journeys, insurer comparisons and savings visualisation while metro users generally prefer faster, frictionless digital renewals.