Odiha News: India is known for its cheap life insurance premium, but now your insurance policy premiums will increase. You may have to pay more premiums for life insurance from April this year. Companies, in particular, are considering raising premiums for term life insurance policies. Some companies have also applied to India’s Insurance Regulatory and Development Authority (IRDAI) for this. The new plan they sent for approval has increased the amount to be paid as premiums.
The new plan has been sent to IRDAI by five private companies, Tata AIA, Aegon life insurance, Max Life, PNB Metlife, and India first life insurance. Other insurance companies are also expected to follow the trend.
Difference between Life Insurance and Term Insurance
Insurance companies state that they are suffering due to cheap premiums already kept and the increase in deaths due to Covid. This will impact both life insurance and term insurance. Still, it will have a slight impact on term insurance because term insurance is the insurance in which the insurance company makes a good amount of money on the insurer’s death. The premiums of term insurance are very low compared to life insurance and endowment, and you also get a lot of returns from it. But if the insurer’s death is not in the period for which the insurance is done, he does not get any returns from it, whereas both are covered in the life insurance policy.
Why Term Insurance is costlier in India
A few years ago, a survey revealed that India’s premium for term insurance is higher than in some developed countries such as the United Kingdom or Australia. The life-supporting facilities are excellent in those countries, which is why the life span is better. While life risk in India is very high, compared to UK, Australia, and the USA, the quality of life here is more work than them, whereas life risk is more.
Who and How much will increase
LIC, a state-owned insurance company, is also expected to raise premiums. Private insurance companies are expected to increase premiums by 10-15%. Many global companies are in the insurance business by setting up joint ventures in India. They suffered huge losses in 2020-21. They do not get a fair return on investment because of the differences in dollars and Rupees. They want to increase premiums to maintain business margins. If insurance premiums are expensive, those who want to buy a term life insurance policy in the financial year 2021-22 will have to pay more in premiums. Also, people with health problems, smokers, and people in the unorganized sector will be affected. Patients who have recently recovered from COVID-16 are also more likely to pay higher premiums when buying life insurance policies.