The period of pandemic witnessed a significant increase in claims of life insurance policies that could trigger an impact in future on premiums.
“The insurance industry has seen a sharp rise in claims during the pandemic, because of which the term insurance prices are expected to increase,” said Rhishabh Garg, Head - Term Life Insurance, Policybazaar.com.
In view of this, he suggests that customers should lock their insurance premiums as soon as they can.
“I recommend the customers to focus on locking their premiums immediately. Since term insurance is a lifetime plan, a 10 percent price hike can translate into a savings of ₹80,000 - ₹one lakh across lifetime,” he added.
Key factors to consider
When it comes to choosing the right term plan, there are multiple factors that are worth considering for buyers. Consumers are supposed to explore the insurance plans that are likely to help them maximise their protection cover.
“Customers should go for a high claim settlement ratio and solvency ratio. Lastly, you also need to customise your coverage by opting for suitable riders. Having said this, claim settlement ratio isn’t directly linked to the price of the product, and a lower priced product might still have a high claim settlement ratio,” added Garg.
The jury is out
Ageas Federal Life Insurance spokesperson says that the company does not have a plan as yet to raise premiums but might reconsider the decision in the near future.
Karthik Raman, Head, Products, Ageas Federal Life Insurance, says, “We pray that the Covid scenario is truly behind us. We don’t have plans to revise the premiums at this juncture, however, we are observing the situation and will take a studied decision if necessary.”
At the same time, not everyone believes that there are more hikes of premiums in store because the industry has already witnessed some increase in the past two years.
“In the last two years, insurance premiums have seen some revisions although the same continue to be affordable and competitive. We don’t see any immediate impact happening in the short term unless there is a shift in the long-term trend,” says Subhrajit Mukhopadhyay, Executive Director, Edelweiss Tokio Life Insurance.
He adds that short term expectations do not, in fact, change premium rates which are determined on the basis of mortality experience and with a consideration of a long-term horizon of 20-30 years.
Kapil Mehta, co-founder of SecureNow Insurance Brokers, also echoes the same sentiment.
“I think it is very unlikely that term insurance rates will increase this year. The insurance rates change only if there are major changes in death rates and there is no evidence of that as yet. I would advise no immediate action on your term plan except to make sure that you have adequate cover,” says Mehta.