With this recent increase in premium rates by several reinsurers, various life insurance companies have increased their term insurance policy rates by 20 to 30%. For example, if a particular insurer’s 1 Crore term plan premium was 20,000/- per year, the same policy will be now available for a premium of 26,000/- per year.
The simple answer is ‘Yes’, life insurance premiums are going to increase very soon with the expected arrival of the 3rd Covid-19 Wave. Lately, there has been an increase in premium rates by several reinsurers. To the uninitiated, a reinsurer company is an organization that protects insurance companies financially. They handle larger risks which are too big in size to be managed by the insurance companies by themselves. This protection helps insurance companies to acquire more business & expand.
Now the question arises as to why such a hike in life insurance premium rates is taking place?
It all started with the Covid-19 second wave in 2021, which was the most devastating waves taking millions of lives. This wave also saw a steep increase in term insurance claims due to a lot of deaths. This steep increase in claims greatly affected the margins of several insurance organizations.
However, both insurers and reinsurers are yet to fully study the impact of the impending 3rd wave. Though some insurance companies have already increased their premium rates, some are patiently waiting before they take a call in increasing their premium rates. IndiaFirst Life’s Deputy CEO also stated that reinsurance companies have raised their rates by nearly 30% in the past year. because of the high mortality rate during the wave in 2021.Probus Insurance’s Director, Rakesh Goyal stated that Bajaj Allianz Life, ICICI Prudential & HDFC Life’s are few of those insurers who have raised their term insurance policy rates as of now.
Furthermore, it’s also expected that several other insurance companies are going to increase their rates. According to the 'Insurance Price Index' by PolicyX.com the price index value of term Insurance has increased by 4.18% in the last quarter of 2021.
So What Should You Do If The Prices Are Increasing?
The right thing for you to do is buy a proper term insurance policy as soon as possible. It is highly recommended for young working professionals to buy the right policy early. Buying the policy early will act as an advantage. Even if the prices of premiums increase going ahead, an early policy purchaser’s premium amount will remain the same. It won’t increase unless and until the person takes additional rider policies.
It is also important on your part to research on various online websites, compare quotes and buy the right type of term insurance policy that offers proper financial protection to your family in your absence. You can even visit coverfox.com and connect with our insurance experts who will guide on buying the right insurance policy.