Market volatility triggered by the ongoing Middle East conflict has cooled investor appetite for market-linked savings products, which form nearly half the product mix of the country’s top private life insurers.
Geopolitical Strain
The share of unit-linked insurance plans (ULIPs) at SBI Life Insurance, the country’s largest private life insurer, has fallen to 52% of the company’s annualised premium equivalent (APE) in the fourth quarter of FY26, from 66% in Q3FY26. APE refers to the sum of annualised first-year regular premiums and 10% of single premiums. On the other hand, SBI Life’s share of high-margin non-participating savings products rose to 20% from 13% during the comparable quarters.
SBI Life Insurance MD & CEO Amit Jhingran attributed the slowdown in ULIPs to changes in customer behaviour in reaction to geopolitical developments. “The geopolitical events that are taking place and that definitely is having some impact on the performance of the equity market also and there are effects seen on the fixed income side also,” Jhingran said during the fourth-quarter earnings call.
ULIPs are hybrid products that combine life insurance with investment. A portion of the premium goes towards life cover, while the rest is invested in equity or debt funds, depending on the policyholder’s preference. These products typically perform well in bullish markets but tend to lose traction during periods of heightened volatility.
Jhingran added that equity markets continue to see robust mutual fund inflows as investors focus on value investing. “Our growth in February and March has been decent enough and we have been able to meet our guidance for the year despite these events,” he said. For the full year, SBI Life’s ULIP share as a percentage of individual new business premium stood at 55%, down from 61% in FY25.
Indian markets have been volatile in recent months due to a mix of domestic and global factors, including US tariffs, rupee depreciation and sustained foreign fund outflows. The volatality was further exacerbated by the US–Israel and Iran conflict in the Middle East since February 27. The benchmark Nifty 50 declined 14.53% between December 2025 and March 2026.
Divergent Strategies
ICICI Prudential Life Insurance also saw ULIPs’ share decline to 46% of its ₹3,830 crore APE in Q4 FY26, from 52% in Q3FY26. Dhiren Salian, CFO, ICICI Prudential Life Insurance Company, said the war in West Asia impacted new business sales in March across product categories, except pure protection policies. The insurer has been focusing on increasing the share of high sum-assured ULIPs, which are less sensitive to market volatility.
In contrast, HDFC Life Insurance reported an increase in ULIPs’ share to 48% of individual APE in Q4 FY26, from 45% in the quarter before that. “We are seeing a significant amount of money flowing into mutual funds, and that appetite does not seem to have reduced. Since ULIPs also have an equity component, I expect similar enthusiasm to continue there as well,” Vibha Padalkar, MD & CEO, HDFC Life Insurance Company, said. The share of ULIPs in HDFC Life’s overall product mix rose to 45% in FY26, from 40% at the end of FY25.
“This growth has come with higher sums assured, either through riders or higher base cover, often more than 10 times the first-year premium, and in some cases up to 30–40 times. Our focus is on nudging customers towards higher life cover in the format they prefer,” Padalkar added.