Term insurance price rise! 10-yr delay can cost 78% more premium

Insurance companies have raised term insurance premiums as a result of the high mortality rate amid Covid-19 in recent times. As per PolicyX.com, the Term Insurance Price Index value has gone up by 4.18% in Q42021. The index value has reached the new figures of ₹23,929 in this quarter. As compared to Q1 2021, the average term insurance prices have risen by 9.75% in the term index value in the quarter under consideration.

PolicyX.com ‘Insurance Price Index’ tracks prices of term insurance and Health insurance from the top five life insurers in terms of gross written premiums. The life insurers included in the index were Kotak Life Insurance, HDFC Life, ICICI Prudential, Max Life and Bajaj Allianz Life.

Out of the life insurance companies, three companies have revised their premium prices wherein the biggest increase was 13.4%, followed by 4.9%, and 0.9%, shows data from PolicyX.com. The remaining two companies kept their premiums constant.

The index factors in premiums for a smoker and a non-smoker, both genders across age groups, i.e., 25 years, 35 years, 45 years and 55 years for a sum assured of ₹50 lakh and ₹1 crore.

Analysing on the basis of the age factor, the term insurance price variation widened with the increasing age of an individual in the last quarter. Delaying a purchase of term policy by 10 years could cost on an average 48.9% more for a 25-year-old, 77.6% higher for a 35-year-old and 80.8% higher for a 45-year-old.

In terms of habits, the smoker male paid 50.5% higher than a non-smoker male and a smoker female paid 49.5% higher than a non-smoker female in the last quarter. Habits seem to have a considerable effect on premiums for both genders.

Health premiums unchanged

The Health Insurance Price Index followed the trend of previous quarters and maintained a similar index value in Q4, 2021 as well. The index value of the Health Insurance Price Index has been constant at ₹25,124 since Q1 2021.

An average person of 26 years paid ₹8,274 premium annually for a health cover of ₹5 lakh sum insured and ₹10,403 premium annually for ₹10 lakh sum insured, shows data from PolicyX.com.