According to the report of ET, the premium of term life insurance is likely to increase again in the financial year 2021-22. According to insurance brokers, due to Kovid-19, private life insurance companies are preparing to increase the premium. Last year, many life insurance companies increased the premium on their term life insurance plans by up to 20 per cent.
Some life insurance companies are going to increase their premium
Ever since people have started taking life insurance by becoming aware, seeing the race of people for life insurance, insurance companies have made an art mood to increase their premium.
Why is the increase happening?
There is a reason for increasing the term insurance premium of life insurance companies. Actually, reinsurance companies are increasing their premium. These firms insure the risks of the insurance companies. Life insurance companies pay them to cover their risk. Due to increase in the number of claims, reinsurers have increased their premium rates. Due to the increase in reinsurance premium, life insurance companies can increase the maximum amount up to 40 percent.
How is the premium calculated?
Rates of reinsurance companies are based on life expectancy. This is a long term trend. It is not related to one-and-a-half year experience. However, this time the step of reinsurance companies has been taken amid the pandemic. This epidemic has swallowed the lives of lakhs of people in the country. Life insurance companies will increase the premium of term insurance once the premiums charged by the reinsurance companies increase. For this, they will have to refil their existing products with the insurance regulator IRDA.
is the math of actual vs. estimated claims?
The estimated claim against the actual is calculated to determine the cost of a term insurance policy. If the ratio is higher than the estimate, then it is a negative experience for insurance and reinsurance companies. Therefore, the reinsurance companies decided to increase their reinsurance rates for life insurance companies when the ratio was higher than expected.
Cost of reinsurance
Thus, the cost of reinsurance for life insurance companies increased. There was also pressure on him to increase the premium of term life insurance plan. Most of the life insurance companies had increased the premium in 2020. Now she is thinking of doing the same from the new financial year starting from April.
Till now years ago no one thought of taking insurance but now people are there to take life insurance.
In some countries of the world except India, life insurance has been made mandatory.In other countries, life insurance has been made mandatory in America, Britain and France.
Now it will gradually become mandatory in India, just as you need bike insurance with a bike, in the same way life insurance will also be mandated in a few days.
Whenever you take a term insurance policy, then definitely read your policy paper carefully because people make the same mistake in taking life insurance policy now.Don’t trust what any agent has said because the agent says something else and something else happens inside the paper.That is why do not rush to take insurance because this life insurance is not so cheap.
If you do not read the things written in the paper while taking insurance, then you may have to face a lot of trouble when you go to take the claim.