Leading life insurers are gradually shifting focus away from Unit Linked Insurance Plans (ULIPs) towards higher-margin participating (par) and non-participating (non-par) products, as sustained market volatility continues to dampen investor appetite for market-linked offerings.
Traditional products gain favour amid choppy markets
SBI Life Insurance, the country’s largest private life insurer, saw the share of ULIPs in its annualised premium equivalent (APE) product mix fall to 57% in Q1FY26, down from 61% in the same period last year. Meanwhile, the share of value-accretive non-par products rose by 300 basis points year-on-year to 38% in the latest quarter.
APE is a standard industry metric used to measure new business sales. It is calculated as the sum of regular annual premiums and 10% of single premiums.
Indian equity markets have remained choppy in recent months due to a combination of geopolitical and macroeconomic developments—including the Israel-Iran conflict, US tariff threats on various countries, and muted corporate earnings. As a result, benchmark indices Sensex and Nifty 50 have posted modest gains of just over 5% since the start of the fiscal year.
Targeted primarily at affluent individuals, ULIPs are hybrid products that combine life insurance with investment. A portion of the premium is allocated toward life cover, while the rest is invested in equity or debt funds, depending on the policyholder’s preference. These products tend to perform well during bullish market phases but lose traction amid heightened volatility.
ULIP share slips but long-term outlook stays positive
ICICI Prudential Life Insurance also saw the share of ULIPs in its total APE decline to 46.8% in Q1FY26, from 51.4% a year earlier. The slowdown in ULIP sales also contributed to a 15% drop in its direct business channel, which fell to ₹252 crore from ₹298 crore in Q1FY25.
“A large component of the (direct) business actually is from the ULIP side. The slowdown in ULIP over this quarter, given the market volatility, has impacted the direct business,” said Dhiren Salian, CFO, ICICI Prudential Life Insurance, during the company’s Q1 earnings call.
HDFC Life Insurance, meanwhile, saw the share of ULIPs remain flat at 38% of individual APE, unchanged from the same quarter last year. However, the share was down sequentially from over 40% in Q4FY25.
MD & CEO Vibha Padalkar noted that the company’s ULIP mix remains lower than the industry average and has been broadly range-bound. “We anticipate a gradual shift, rather than a sharp swing in favour of traditional products over the course of the year,” she said during the Q1 earnings call.
Despite the current slowdown, insurers remain optimistic about a rebound in ULIP demand. Amit Palta, Chief Products and Distribution Officer at ICICI Prudential Life, said the long-term market fundamentals remain strong.
“With core fundamentals of the market being where it is for the country, and India’s demographics still remaining young, I don’t think this volatility and uncertainty on unit-linked products and these events are going to stay for very long,” he said.
According to Palta, affluent customers don’t typically rush back to ULIPs immediately after market corrections but return gradually. “I do believe that our outlook on unit-linked is not very conservative going forward,” he said. “At some point in the second half, you will see buoyancy coming back.”