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Amidst rising inflation, term insurance premiums may see an increase again. Some companies are considering raising insurance premium rates. However, this year’s increase is not expected to be as high as in the previous few years. There is a possibility of a 5% to 8% increase in insurance rates this time.

According to media reports, there has been an increase in insurance claims for the past two years following the COVID-19 pandemic. Now, after two years of high claims, insurance companies are planning to raise premium rates this year. This means policyholders may have to pay more for premiums. However, with the containment of the coronavirus pandemic, the number of death claims has also decreased for insurance companies. The country’s largest insurance company, Life Insurance Corporation of India, has recorded a decline of more than one-third in death claims this year. The death claim rate was very stable before the pandemic started.

What are the reasons?
According to industry estimates, there has been an increase of about 45% in term insurance premiums in the last two to two and a half years. Reinsurers increased their rates due to higher mortality rates and an increase in claims during the pandemic. The prices of insurance premiums will also depend on external factors that can affect life expectancy. As per the WHO, recent reports indicate the emergence of several dangerous diseases and the growing new wave of COVID in China can also impact insurance rates. However, premium rates for term insurance in India are still significantly lower compared to other countries.

What is term insurance?
Term insurance is a pure life insurance policy that provides financial security to customers. It pays out the policy amount to the nominee after the policyholder’s death. During the COVID-19 pandemic, there has been an increase in customer interest and demand for life insurance policies.