However, the term Insurance Premiums are Likely to Increase market in India is set to see unprecedented volatility in December and January.
What Does All of This Imply For You, The Customer?
Between December 2021 and January 2022, new term insurance customers will pay rates that are 25–40% more than previous levels. This increase in premium prices applies to both offline and online insurance products.
Online insurance plans have grown in popularity over the last six years owing to its convenience and reduced costs. With the forthcoming increase in premium prices, however, internet insurance consumers will find themselves paying greater premiums than previous policyholders.
What Are Your Options?
If you don’t already have term insurance, now is the time to get one. It is important to remember that insurance companies do not increase their premium prices all at once. So, take advantage of the astronomical spike in premiums by purchasing a term insurance coverage as soon as possible. Remember that term insurance premium rates are locked in for 20 to 40 years, so it’s preferable to get a policy before prices climb.
What Does the Interest Rate Increase Mean for Existing Policy holders?
Existing policyholders will not experience a rise in their premium rates since term insurance prices are locked in from the moment you acquire the policy. Any future rate increases will have no effect on existing premiums.
Why is There an Increase in Premiums?
Due to Covid-19, life insurance companies got four to five times the number of death claims in 2021 as they did in 2020. Insurance firms paid out Rs 12948.98 crore in claims settlement as of October 2021. Because of the rise in claims, multinational reinsurers have raised their rates to assure more profitability.
GIC Re, one of India’s major foreign reinsurers, raised rates earlier this year, and Munich Re, another international reinsurer, has also warned insurance firms that rates would be raised in December.
What Will Happen to Term Insurance Policies in India?
Term insurance businesses in India are concerned that rising premiums may lead to a drop in demand. Since the beginning of the covid-19 epidemic, there has already been a round of premium increases. These increases were in the 10–15 percent range. However, the forthcoming rate rise will be the most substantial in the previous decade.
For many years, the main selling point of term insurance has been its low cost. Despite this, most Indians have not prioritised term insurance. As a result, insurance firms are afraid that, at a time when term insurance knowledge and acceptance are increasing, higher prices would turn off prospective clients.
The insurance firm may decide to pass along all or a portion of the increase to its clients. Some insurance providers, on the other hand, may absorb a portion of it. Large insurance firms with negotiation strength are engaging with global insurers to reduce the rate rises that are being imposed. Finally, how the higher rates affect policyholders will be determined by the insurance company’s business plan.
READ ALSO: What is insurance?
Is Term Insurance Still Beneficial?
Prior to the covid-19 epidemic, most Indians may have purchased insurance as a tax-saving measure. The epidemic has forced many individuals to reconsider this viewpoint. More and more individuals are seeking for ways to financially safeguard their family in the event of their untimely death, and a term insurance plan is one method to do so without breaking the bank.
As pure protection plans, term insurance policies are relatively low-cost and high-coverage in nature. So, despite the increase in premium prices, financial counsellors believe that term insurance plans are still worthwhile.
A term insurance policy is a cost-effective solution to safeguard your loved ones from financial hardship in the case of your death. And, although an increase in term insurance premium prices is unavoidable, you should not be discouraged from getting a term plan. Purchase a term plan now to ensure the security of your family.