Market volatility drives policyholders towards guaranteed insurance and annuity plans

With markets turning volatile and crude oil climbing above $100 a barrel, investors are increasingly seeking stability over risk, say experts

That shift is now becoming visible in the life insurance sector, where insurers say demand for traditional guaranteed-return and annuity plans is rising, while appetite for unit-linked insurance plans (ULIPs) is moderating.

For Canara HSBC Life Insurance in the nine months ending December for FY2026, unit-linked insurance plans (ULIPs), whose returns depend on market performance, accounted for 61 percent of the company's business on an annualised premium equivalent (APE) basis.

APE sums the annualised regular premiums plus 10 percent of single premium from new policies collected in a year.

By the end of the full financial year March 2026, that share had fallen to 51 percent. And in the last four months, the trend has sharpened further with traditional guaranteed products now accounting for a larger portion of new business.

"Starting from January, we saw very good uptake of our traditional products. Our traditional mix during this time was almost 80 percent basis individual APE," said Anuj Mathur, MD and CEO of Canara HSBC Life Insurance.

The shift is being driven by a combination of factors such as volatile equity markets, elevated interest rates and growing anxiety about future income among households.

"When you face uncertain times, you want to protect yourself. Right now the environment is favourable from a guarantees perspective. This is the time when people actually lock in decent returns from a long-term perspective," said Mathur.

He pointed out that guaranteed insurance products offer something no other financial product currently can, which is long term guarantee for for 15 to 20 years. "There is no product right now in the market which gives a guarantee for long term except insurance. And when I say long term, I am talking of 15 to 20 years," he added.

Annuity products are seeing strong growth as well, with customers increasingly focused on securing a stable post-retirement income stream.

Rushabh Gandhi, CEO of IndiaFirst Life Insurance, agrees there is a demand for guaranteed products. "There is a noticeably growing demand for guaranteed annuity products."

Gandhi attributes this to growing concerns about income continuity. "The ongoing geopolitical situation is increasing concerns around continuity of earned income. Customers are worried about employment risks, business pressures or broader economic disruptions that may impact household incomes. As a result, many are turning to guaranteed annuity solutions to secure a stable and predictable income flow for the future, irrespective of external economic conditions," he added.

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