India’s life insurance sector is witnessing a strategic shift in 2025. After years of aggressively promoting Unit-Linked Insurance Plans (ULIPs) and non-par products, insurers are now turning back to participating (par) products. The move comes amid changing customer sentiment, lower interest rates, and the need to maintain a stable portfolio mix.
What Are Participating Products?
Participating (par) products are traditional life insurance policies where customers not only receive guaranteed benefits but also share in the insurer’s profits through bonuses. Unlike ULIPs, which are linked to market performance, par products provide more predictable returns, making them attractive for risk-averse policyholders.
| Product Type | Returns | Risk Level | Best For |
|---|---|---|---|
| ULIPs | Market-linked, variable | High | Investors seeking growth |
| Non-Par Plans | Guaranteed only | Low | Conservative savers |
| Participating (Par) | Guaranteed + bonus | Moderate | Balanced customers |
Why Are Insurers Making the Shift?
- Interest Rate Environment
With RBI rate cuts reducing annuity yields, insurers are finding it difficult to sustain attractive guaranteed payouts. Participating products allow flexibility in sharing profits without overpromising. - Customer Preferences
Post-pandemic, many customers are prioritizing long-term stability over aggressive growth. Participating products address this sentiment by offering both safety and upside potential. - Portfolio Rebalancing
For insurers, overdependence on ULIPs left portfolios vulnerable to market swings. By increasing the share of par products, companies can ensure more stable cash flows and predictable claim obligations.
Industry Voices
Market experts note that top insurers like LIC, HDFC Life, and ICICI Prudential are expanding their participating product lines. Industry insiders believe that the par comeback will reshape India’s life insurance mix over the next five years.
Financial advisors also highlight that participating products could appeal to middle-income families seeking both protection and wealth creation without exposure to market volatility.
Why It Matters
This shift signals a customer-first approach by insurers. By reintroducing traditional yet flexible par products, companies are not only diversifying their portfolios but also restoring trust in life insurance as a long-term financial planning tool.
For policyholders, this means more choices that match their comfort with risk and long-term goals.
By balancing risk, insurers are bringing back participating products, which could change how Indian families plan their financial future in 2025.
If you’re curious about which policies agents find easiest to sell in today’s market, check out our detailed guide — Which Insurance Products Are Easiest to Sell in India? (2025 Guide)
