What’s driving digital insurance payments in India: Is it UPI, cards or netbanking?

When it comes to paying for insurance online, Indian consumers are clearly rethinking how they manage their money. Policybazaar’s latest insights into payment trends among one lakh customers

 in FY25 reveal a shift that goes beyond just digital adoption – it's about smarter, more intentional financial decisions.

UPI continues to lead India’s digital payment story, but what’s interesting is how comfortably people now use it for large, long-term financial commitments like insurance. On Policybazaar, 

UPI payments for insurance premiums rose from 27.93% in FY24 to 33.71% in FY25. But the real story lies in how this growth plays out across categories.

Harsh Vardhan Masta, Head of Payments at Policybazaar, explains, “We are seeing a clear shift in how people plan before paying for insurance. Beyond going digital, they’re choosing smarter

options. UPI isn’t just for daily spends anymore—it’s now a trusted mode for major financial decisions too.”

UPI rises over 45% in insurance-cum-investment products category.  This category, which combines insurance with wealth-building features, saw the highest surge in UPI usage. It reflects

growing comfort with using UPI for high-value payments and long-term planning, not just for quick, daily transactions.

Health insurance saw a 34% rise in UPI payments. Interestingly, debit card usage dropped nearly 40% in this segment. Many consumers are shifting to UPI and credit cards, which offer more

flexibility, cashback, or EMI benefits.

UPI grows even as awareness stays low in the case of term insurance. Although still an underpenetrated product, term insurance recorded a 25% rise in UPI usage. Today, 36% of all term 

insurance premiums on Policybazaar are paid through UPI, proving that even niche categories see strong digital traction.

Motor insurance remains the most UPI-penetrated category, with nearly half (50%) of all policies being paid for via UPI. Given this strong base, the 15% growth in FY25 still points to

continued momentum.

On the other hand, credit cards are gaining ground in terms and life insurance. While UPI’s rise is expected, what’s surprising is the resurgence of credit cards, especially in big-ticket

segments like term and life insurance. The flexibility of EMIs, reward points, and credit limits seems to appeal to consumers looking to manage their cash flow.

However, debit cards are slipping across the board. In contrast, debit card payments fell by nearly 17% overall. As more consumers prefer to avoid immediate out-of-pocket spending, debit 

cards are slowly losing favour to credit-based or bank-integrated options like UPI and netbanking.

The answer lies in flexibility, convenience, and control. UPI scores high on all fronts. But credit cards are not far behind, especially when people are looking for rewards and payment 

flexibility. Netbanking continues to hold its ground for some, but the shift is unmistakable: today's consumer wants smarter, more adaptable ways to manage their money, and their insurance 

payments are reflecting that.