Term life insurance is the simplest type of life insurance policy that charges specific premiums from all policyholders. In return for the premium, the policyholder receives financial coverage for their nominees after their demise. Policyholders need to pay regular premiums to keep their plan active.Read more
In recent months, there has been an increase in the rates of premiums for term life insurance. A hike of 2.79% has been seen after April 2021, which is the second quarter of the year. Term life insurance premium rates have experienced an increase in rates after the second wave of COVID-19.
At the onset of the financial year 2021, Indian insurers have increased term insurance prices by around 3%. It is further expected to rise to 15% to 20%, which is considerably higher. This sudden surge is a result of the ongoing pandemic situation in India.
After the severe impacts of the second wave of COVID-19, mortality rates have been at an all-time high in the country. It has become the primary reason behind the rise in rates.
Mostly, all prominent companies have contributed to this hike. The rest of them are expected to do so by the end of this year or so. The increase would be uniform for all the companies, but the exact rates of premium would vary for different companies. In recent times, this is the second incident where term insurance prices have escalated.
It is always favourable to buy term life insurance for safeguarding your family after your demise. Despite the price rise, term life insurance is a necessity for everyone. The rising rates of premiums must not deter you while purchasing financial coverage for your loved ones.
Before purchasing, make sure you are fully informed about hiked rates of premium. This would help you to plan your finances accordingly. Also, forecasting your future expenditure would be affected by proactive planning of premium.
People who have policies bought before March 2021 will not have to pay increased premiums for their existing term insurance plans. However, those currently planning to buy it must not be discouraged by the increased prices. All insurance companies have term plans that suit every pocket. This surge could be seen as profitable for the companies, premium rates in India are some of the lowest in the world.
Besides multiple unfortunate casualties, COVID-19 has disrupted every other function of our society. From health to the economic crisis, it brought us all. It later became a crucial reason for the price hike as well.
Almost every insurance company has contributed to the premium rise till now. This has come with several problems for people who are finding it difficult to adjust to the new prices. This forces us to look into the actual reasons behind the surge.
While causing difficulties with the general public with increased rates, the hike in term insurance premium rates comes with its advantages. Decisions such as this price hike are not reached upon in a matter of weeks.
It is after great evaluation and market analysis that the insurers reach a point at which they want to raise premium prices, knowing full well that it would cause issues with people buying term insurance.
Some of such benefits as to why you should consider these increased rates advantageous are as follows:
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