Term insurance premiums are lower in India now compared to developed countries and any increase in premiums will correct this anomaly going forward.
Term Insurance Policy: The COVID-19 pandemic has impacted almost all of the global population as the number of recorded deaths keeps on rising every passing day. The importance of life insurance is seemingly going up as the need to have a life cover is increasingly becoming crucial.
Earlier, the insurance regulator, IRDAI had already announced that any death caused due to Coronavirus will get coverage under life insurance policies. Further, in order to provide assistance to those who are unable to pay the premium, the regulator had relaxed the due date guidelines and extended the premium due date by 30 days.
FE Online in an email interview with Sanjay Tiwari, Director, Strategy, Exide Life Insurance, finds outs what step is the insurance company taking in these times and also on the apprehension about the increase in the term insurance premium rates.
Is the term insurance premium set to rise soon? What could be the reasons?
There is a risk-sharing arrangement with the re-insurer. The insurance company has limited risk while the big chunk of the risk is transferred to re-insurers. So term premiums have a big re-insurance cost part built-in. Re-insurers are now increasing their rates based on their actual experience.
Hence this will cause the term premiums to increase. However, it is pertinent to note that term premiums are lower in India now compared to developed countries like the US and Singapore, due to high competition. The increase in premiums will correct this anomaly going forward.
What are some new initiatives that the company is taking in reaching out to new policyholders or in servicing existing policyholders?
The COVID-19 scenario is an unprecedented global phenomenon. We recognize that given the current situation, customers might find it difficult to reach out to us for various services. However, we understand that in it in critical times like these, our customers need us the most. Thinking customer backwards, we have taken multiple initiatives to ensure their safety as well as continuity of service to our customers.
The first step we took towards the same was to notify all our customers that all COVID19 related death claims will be covered under our existing applicable policies. We have also created a ‘COVID19 assistance’ section on our website along with rolling out a simple online claims process to enable a smooth and hassle-free claims experience. We have ramped up our communication with customers to update them on the various digital self-servicing options available to them and increased the scope of our remotely assisted services.
Furthermore, the grace period for customers whose premiums were due from 15th February onwards has been increased by an additional period of 30 days. This is in addition to the statutory grace period.
What is the IRDAI’s take regarding the payment of premium by the policyholders in the context of COVID-19?
As per the existing regulations, a grace period of 30 days for policies with annual premiums, and 15 days for policies with monthly/half-yearly payable premiums has been given. IRDAI has permitted an additional grace period of 30 days for life insurance policies as per the circular dated 23rd March.
In addition, the government has also allowed relaxations on claiming of tax deductions under the Income Tax Act, 1961 which will allow customers to claim tax deductions for fiscal year 19-20 for delayed premium payments done till 30th June 2020.