Term insurance covers will now cost less

A lower rate of premium can also lead to possibly higher insurance covers for the same amount or even a lesser amount than what was paid before. Arnav Pandya reports.

Investors can now expect a lower rate of premium from insurance companies for their term insurance. Recent developments in the field of insurance have ensured this and investors must make the best of these developments. A lower rate of premium can also lead to possibly higher insurance covers for the same amount or even a lesser amount than what was paid before.

HT Image

Reason for change
Insurance companies have to maintain what is known as a solvency margin. This margin has been reduced and therefore has freed up the amounts that the insurance companies need to run their business. At the same time many insurance companies have flooded the market in recent years and have the experience of several years in the Indian insurance market behind them. They have observed the behaviour and the position in the market and are now able to put this experience to use in pricing the products.

Selective reduction
In the initial phase only a few companies have reduced the premium. Thus the investor could find that several companies still have the same premium as before. Earlier, many companies had reduced the premium on term policies to such a level that they cannot afford such prices anymore. However, competition is another factor that can lead to more action in the area because it is difficult to remain an island when there is a change happening all around.