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Term insurance prices rise by 4.18%; health insurance rates constant in quarter 4, 2021: Survey

Term insurance prices rise by 4.18%; health insurance rates constant in quarter 4, 2021: Survey

Term insurance prices rise by 4.18%; health insurance rates constant in quarter 4, 2021: Survey
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By Anshul  Jan 4, 2022 1:16:03 PM IST (Published)

Insurance aggregator PolicyX highlighted the prominent changes that occurred in the insurance prices and cited reasons for the same.

The term insurance price index value has gone up by 4.18 percent in quarter 4, 2021, while, health insurance price index followed the trend of previous quarters and maintained a similar index value, said PolicyX in a statement.

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“The index value of term plan has reached the new figures of Rs 23,929 in this quarter. The PolicyX.com report marks a huge difference of 9.75 percent in the term index value between Quarter 1, 2021 and Quarter 4, 2021. The index value of the health insurance price index, on the other hand, has been constant at Rs 25,124 since Quarter 1, 2021 till Quarter 4, 2021 reflecting no change in the premium prices of health insurance, “ the insurance aggregator said while announcing data of ‘Insurance Price Index’- Life Insurance and Health Insurance for Quarter 4, 2021.
Citing reasons for rise in term plan premiums, PolicyX said that this is because of the immense pressure endured by the insurers and re-insurers due to the COVID-19, causing a high mortality rate faced by the country in recent times.
“The re-insurers and insurance companies have employed their best efforts to provide complete convenience to policyholders by settling the maximum number of cases. However, on the contrary, they were forced to hike the term insurance premium prices to manage the financial pressure. Along with that, the underwriting of term insurance prices has also gone stricter to ensure the reduction in the losses caused to the term insurance companies in the future,” it said.
Out of 5 life insurance companies, as many as 3 companies have revised their premium prices wherein the biggest increase was 13.4 percent followed by 4.9 percent, and 0.9 percent. The remaining 2 companies kept their premiums constant, PolicyX said.
Analyzing on the basis of the age factor, PolicyX said that the term insurance price variation widened with the increasing age of an individual in the last quarter.
“This means delaying a purchase of term policy by 10 years could cost on an average 48.9 percent more for a 25-year-old, 77.6 percent higher for a 35-year-old and 80.8 percent higher for a 45-year-old,” the insurance aggregator said.
In terms of habits, the smoker male paid 50.5 percent higher than a non-smoker male and a smoker female paid 49.5 percent higher than a non-smoker female in the last quarter. Habits seem to have a considerable effect on premiums for both genders, PolicyX said.
The mentioned premium prices are averaged from 5 leading insurance companies for various age groups i.e. 25 years, 35 years, 45 years and 55 years for both genders and smokers and non-smokers category and for a sum assured of Rs 50 lakh and Rs 1 crore.
On health insurance, PolicyX said that on an average a 26 year-old paid Rs 8,274 premium annually for Rs 5 lakh sum insured and Rs 10,403 premium annually for Rs 10 lakh sum insured for 1 adult category in quarter 4.
“The health insurance premium does not increase proportionately with the sum insured amount. Quarter 4, 2021 showcases that a 36-year-old male paid Rs 9,519 for the sum insured of Rs 5 lakh and the same person paid Rs 12,183 for the sum insured of Rs 10 lakh on an average. In this case, the premium increased only 28 percent in spite of a 100 percent increase in the sum insured. As per the Quarter 4, 2021 report, a premium paid for 2 adults of 36-years old was Rs 13,921 and the premium paid for 2 adults and 1 child of the same age category was Rs 16,530 for Rs 5 lakh sum insured,” it said.
Of the 5 companies, forming the index, the variance observed in premiums among the health companies is quite high (ranging from 59 percent to 76 percent for different age groups) as compared to variance observed in term insurance companies. This is primarily because of the fact that coverage, features, and benefits differ significantly for health insurance whereas term insurance is usually simple with similar benefits in case of death, PolicyX said.
"The premium prices for health Insurance are average prices taken from the leading 5 health insurance companies for all age groups i.e, 26 years, 36 years, 46 years, and 56 years and all coverage types i.e, 1 adult, 2 adults, 2 adults + 1 child, and 2 adults + 2 children," it added.
Commenting on the latest report, Naval Goel, Founder and CEO, PolicyX.com stated, “Contrary to the constant media reports of price increases, the data shows that very few companies have raised prices and the insurance companies have been benevolent towards customers by increasing premium prices gradually. However, the constant increase in claims has also resulted in the tightening of underwriting norms. For the consumer, our message remains the same: Buy Adequate Cover Now - Delaying Purchase can Cost Dearly."
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