Term life insurance policies may become costlier by 15-20 percent soon, said Rakesh Goyal, Director at Probus Insurance in an exclusive interaction with CNBC-TV18.
“As claims have increased lately, life insurance companies are likely to pass on the surge in re-insurance premiums to the policyholders which might increase the premiums for term life policies,” Goyal said.
The rise in re-insurers premium is primarily due to an increase in mortality rate during the COVID-19 pandemic. Thus, with the increase in the reinsurers' premium rates, insurers may raise the premium of term life insurance policy for buyers.
Also, there has been an increase in demand for term life products and life insurers over the last few months and insurers are re-assessing the pricing, Goyal added.
It’s important to note that there has been a hardening of premiums for term life insurers by several insurance companies in the last one year. The increase in the premiums was largely due to changes in the reinsurance premiums.
Hence, the best way to save on cost, experts suggest, is to go for a term insurance plan which suits the requirements of the individual the most and gives maximum benefit. Further, to make the premium amount pinch less on the pocket, one can go for the monthly payment option.
Term insurance is a must for every individual, hence it is suggested to buy a term policy at a younger age, as rates are less at a younger age. It's also advisable to buy the term plan or increase coverage before the new rates are announced.
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