Term Plan: 10-year delay in buying costs a 35-year-old 70% more, says India’s first insurance price index

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Updated: January 19, 2021 4:23 PM

PolicyX.com claimed that the insurance price index uses concepts of indexing and basic statistics.

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PolicyX.com has launched an insurance price index which will allow users to have a better view of insurance prices by observing the shifts and trends in the premium prices. In a statement, PolicyX.com claimed that the insurance price index uses concepts of indexing and basic statistics. It will track prices of health insurance and term insurance from leading insurance companies in India and provide analysis and trends through data analytics.

Commenting on the initiative, Naval Goel (CEO & Founder of PolicyX.com) said, “It is a new concept for India. As a thought leader in the Insurance space, we plan to bring some interesting insights and data analytics through this report every quarter for the consumers and industry participants.”

The first report of the index claims that the prices have remained stable in the last quarter for both health and term insurance.

Interesting insights

Average term insurance premium increases exponentially with age. According to the report, premium prices increase exponentially as we age. Delaying a term plan purchase by 10 years costs on an average 45 per cent higher for a 25-year-old and 70% higher for a 35-year-old.

The report said, “People aged 55 are paying the highest amount, which is four times more than what a 25-year-old is paying. Therefore it is always better to enter into a term plan early and lock-in the prices. Typically, people cover themselves up to the age of retirement.”

Average premiums for a 55-year-old is 85% higher than a 45-year-old

Premiums for a 45-year-old is 70% higher than a 35-year-old while the premium for a 35-year-old is 45% higher than a 25-year-old.

The average premium is computed considering both male and female persons and also smokers and nonsmokers.

Insurance companies perceive the male insured risk to be higher than females. The average cost of male insured is 21% higher than for female insured for a term plan.

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Smoking plays a very critical part of the risk premium.

According to the index data, there is a huge difference in risk associated with a smoker vs a non-smoker. On average, a smoker pays 55 per cent extra compared to a non-smoker. This might very well highlight the importance of habits on the perceived risk of mortality.

Term insurance prices have decreased substantially over the last few years in India but have started increasing since 2020.

“We commend PolicyX.com for introducing greater transparency for insurance customers in India with the industry’s first price index. PNB MetLife is committed to customer centricity and we’re excited the index will support customers in choosing a policy that is fit for their needs while delivering value for money,” said Sameer Bansal, Chief Distribution Officer, PNB MetLife India Insurance Company Limited.


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