To further boost their healthcare shield against any serious illness, policyholders have been buying critical illness riders along with term plans in the last few months.
The increase in sales of term plans witnessed by the Indian life insurance industry can be attributed largely to the spread of the novel coronavirus. To further boost their healthcare shield against any serious illness, policyholders have been buying critical illness riders along with term plans in the last few months.
Market participants said sales of term plans had increased by around 30-40% in the first quarter of the current financial year compared to last year. Sales of critical illness riders have also seen a surge of around 10-20% in the last few months. Queries on critical illness covers have gone up, too, since April, they said.
Manoj Jain, MD of Shriram Life Insurance, said, “While there has been a surge in term plan sales, we have also seen rise in buying critical illness cover by 10% in this fiscal compared to the last fiscal. The key reasons for buying the term plan is the fear of ongoing pandemic and increased awareness of insurance.”
Term plans are pure protection plans offered by life insurance companies. The insured gets a fixed amount on death and there are no maturity benefits if policyholders survive the policy term. Critical illness riders form the optional cover that gives claims payout on the diagnoses of a disease. Typically, critical illness riders include diseases such as cancer, paralysis, heart attack, lung diseases, among others. Under the critical illness rider, on diagnosis of an acute illness, the policyholder is provided with a lump sum benefit by insurance companies.
During a media call to discuss the first quarter results of ICICI Prudential Life Insurance, MD & CEO N S Kannan stated that they had seen an increase in the sales of critical illness cover in the past few months. Insurance companies have maintained that even as premiums of term policies have risen by 20-40% since April, policyholders have continued to buy them to protect themselves from any unforeseen event.
However, while buying a critical illness rider, policyholders should take a careful look at the diseases mentioned that it covers, at what stage insurers will pay the money and the premiums. Santosh Agarwal, CBO-Life Insurance at Policybazaar.com, said, “Unlike term plans where premiums are fixed, in critical illness cover it can change after every three years. So, one has to take care of this issue while buying the critical illness cover.”