The reinsurance premium may be revised which will lead to the premiums for term insurance plans to increase by 20 to 50 per cent, across insurers.
If you are looking to buy a term insurance plan, you may have to hurry up a bit, in case you want to keep the cost lower. According to industry experts, the premium of term insurance plans may be revised upwards from April 1, 2020. Therefore, for those who have the need to buy a term insurance policy or are inadequately insured, should try to buy the term plan before March 31, 2020.
Term insurance plans are low-cost, high cover plans that only provide life protection. On death during the policy term, the sum assured is paid to the nominee while nothing gets paid if the policyholder survives the term of the policy. Anil Kumar Singh, Chief Actuarial Officer, Aditya Birla Sun Life Insurance says, “Protecting one’s future financial needs with a term insurance plan is definitely good for the long run. In view of the increasing uncertainties in people’s lives, having a life cover with a term insurance plan is a must and one of the safest options, securing the financial future of one’s family members”.
The term insurance plan premium increase with age. It means, higher the age, higher is the premium. Once bought, the premium remains the same until the end of the policy term. The primary benefit of term insurance plan is to replace the income of the bread earner of the family and help maintain the standard of living of the surviving members of the policyholder.
The increase in premium could be primarily owing to a hike in the reinsurance premium. Indian insurance companies re-insure their business with re-insurers companies by paying a reinsurance premium. Any upward revision in reinsurance premium by re-insurers is generally passed on to the policyholders.
According to industry people, the reinsurance premium may be revised which will lead to the premiums for term insurance plans to increase by 20 to 50 per cent, across different insurers from April 1. Any such increase is also significant because the term insurance premium has remained more or less constant for the past 5 to 6 years.
Most financial planners suggest to buy life insurance of at least ten times of the take-home pay and term plans best suits for such a need. One may buy term insurance online which are comparatively much cheaper than offline term plans. As per the Delhi government’s notice, the insurance sector falls under essential services and one may therefore either buy the term plan online or approach the insurance company.
Before buying a term insurance plan, compare the premium across a few insurers and then decide. Anyone with financial dependents needs to have life insurance and buying the term plan best suits the requirement. With stock markets down, the value of assets or the portfolio could have come down for most investors. Make sure, your long term goals are protected with adequate life insurance and buying it before March 31, 2020, will help even if the premium remains constant.