Life insurance companies can increase the cost of term insurance by 20-40 percent in the next two-three months during lockdown. Some companies have already increased the cost of term insurance by 20 percent in the last one month and are giving a strong indication of increasing the premium by 20 percent again in the next 3-6 months. According to insurance experts, life insurance companies are charging higher prices for term insurance from customers because the reinsurers have increased their premium charges. Life insurance companies pay premiums to reinsurers to cover a variety of risks.
In his statement, Santosh Aggarwal, CBO (Life Insurance), Policy Market, said that the reinsurers set their premiums by measuring the actual claims and potential claims rates. If the potential claim rate is higher than expected, it is seen as a negative for mortality and an increase in premium charges. He said that due to increase in premium by the reinsurers, life insurance companies have increased the price of term insurance by 20 percent during the last one month.
Apart from this, he said that in the next three to six months, the reinsurers companies can increase their premium fee by 20-25 percent. He told that in the coming time many things are being added to term insurance, so the fee for term insurance is going to change. According to the policy market, Tata has increased its term insurance by 30 percent in the last one month. IPRU has increased 21 percent, Max has increased 3 percent and HDFC has increased 4 percent. Companies which have reduced or not increased in the last month, can simultaneously increase up to 40 percent.
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