Premiums for term insurance plans are likely to increase between the range of 10 per cent to 15 per cent soon. While some insurers have already increased the premiums in recent months, some others are expected to follow suit by April 2021.
Premiums for term insurance plans are likely to increase between the range of 10 per cent to 15 per cent soon. While some insurers have already increased the premiums in recent months, some others are expected to follow suit by April 2021.
Indraneel Chatterjee, Co-Founder and Principle Officer, RenewBuy, says, “With the increase in demand for term insurance plans from consumers, post-Covid, and high-risk assessment from insurers, the premiums for term insurance plans are going to be increased by most insurance companies post-April 1.”
Hence, people who are looking at buying term insurance before the price rise in premium can opt for the digital model to fast track the process. Various platforms like social media, website, email, and apps to interact with the insurers can be used to get guidance in terms of selection and purchase of plans.
Chatterjee says, “The role of digital here is significant for people who want to buy term insurance by the end of this financial year. There is no prospect of filling lengthy forms and furnishing innumerable documents to purchase insurance. Insurance driven by digital model and agents can help consumers in innumerable ways to buy the right insurance products as per the needs and requirements of families.”
Having said so, according to experts, 65 per cent of life insurance/term insurance which comprises the largest segment of general insurance is still driven by traditional means of insurance processes – relying on offline processes of meeting agents, garnering information, documentation for procurement of policies and processing of claims and agreements. Not only this, Chatterjee adds, “the traditional, offline and branch led driven insurance model makes it difficult for insurance to penetrate into the Tier 2 and 3 cities. There are around 700 million customers who have the need for insurance but there is a lack of accessibility.”
How digital model can help insurers in buying term insurance?
Experts say a digital insurance model, driven by insurance advisors can help individuals buy term insurance in a transparent, credible, seamless, personalised, and less time-consuming process. There are some insurance aggregators which have adopted the insurance advisor- digital model. Insurance advisors of these companies are equipped with the digital model which helps them guide potential policyholders with the right term insurance product. This significantly reduces the purchase time for a consumer online as compared to buying offline.
The Digital model propelled by insurance advisers help individuals in calculating the term insurance coverage, a family requires as per their income, the standard of living, needs and requirements. The entire process, starting from selecting an insurance policy, to underwriting and claiming for policyholders is also seamless, at the click of a button.
How will the change in term insurance affect the current term insurance policyholders?
People who have already bought a term insurance policy for themselves will not have to pay the increased premium. Chatterjee says, “The increased premium will only be applicable to people who buy the policy after the end of this financial year i.e., after 31st March 2021. This means that if one purchase term insurance policy before the end of the financial year, he or she can save about 10-15 per cent increase in the premium.”
Things to keep in mind before buying a term insurance plan
Every individual needs to calculate the amount of coverage that his/her family requires to maintain their lifestyle, pay off the debts, and fulfil their financial goals when and if the policyholder does not survive. In any case, experts say, there should be no delay in buying a term insurance policy because the premiums are lower when one is young. The premium will increase with every passing year because of the increasing age of a person as well as increased rates by re-insurer.
