The insurance companies have indicated that there may be an increase in the insurance premium for term insurance plans, probably from the fourth quarter of 2022. Let’s understand the reasons behind revising the premium rates and specifically for term insurance plans. Keep reading.
If you are planning to buy term insurance at cost-effective rates, then you must not delay it further. If the reports are to be believed, then insurance companies may soon revise the term insurance premium to a higher rate making them more expensive. Though the final information is yet to be finalized and rolled out in public, there are chances that the repricing may happen soon.
Let’s look into the reasons behind this revision of term-insurance premium:
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Increase in Rates by the Reinsurers:
A reinsurer is a company that helps insurance companies to get more business by supporting them in handling risk (underwriting risk) higher than what they could handle alone. It is expected that reinsurers will increase their rates (for risk-sharing) by 10-20% for insurance companies, which will lead to a higher premium for new term plan buyers.
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Increase in Death Claims During Covid-19:
During the pandemic, the death claims made by customers sharply increased, and the insurance companies, in turn, made higher claims from their reinsurers. These claim settlement numbers are way higher than expected, imposing more burden on the insurance companies and reinsurers also. Since the risk of contracting covid is still present with new variants infecting populations, a further rise in mishaps can be expected. This scenario may also push the term-insurance rates further.
Why is Only the Term-Insurance Premium Affected?
Though death claims during covid-19 have been made across all the categories of insurance plans, the rise in premium is expected only for term insurance plans. Since the term insurance plans provide pure protection, they offer a larger life cover at a smaller cost. However, due to lesser premiums and higher coverage, the insurance companies take a bigger risk with these plans, which they share with reinsurance companies. Hence, to bear the cost of risk and handle the expected rise in death claims in the term insurance category, its premium might be increased in the coming months.
How the Situation Affects the Customers?
The existing customers or those who have already purchased a term insurance plan will not be affected by the rise in premiums since their premium cost is already fixed for the duration of the plan. Also, those who are planning to buy the policy in the next few days can get it at the existing prices only. If you plan to delay your purchase further, you may have to bear extra costs for the same policy. Hence, it is advisable that you must buy it without pushing it further if you wish to buy a new term insurance policy soon. Not to mention, it is very convenient to buy a term plan online these days.
Protect Your Loved Ones from the Uncertainties of Life
Term insurance plans offer pure protection, which means that the nominee gets the assured sum in case of the death of the insured during the term. The importance of such plans has increased manifolds after the health risk imposed by the pandemic. Buy a term plan today to protect your family from the uncertainties of the future.
