Term insurance prices up 1% while health prices remain stable: PolicyX Survey

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PolicyX.com, the leading online insurance aggregator, released on Friday ‘Insurance Price Index’ data for Quarter 3, 2021, showing a marginal shift in the value of term insurance whereas health insurance prices have remained stable during the same period. The data is for a period comprising July, August, and September 2021.

According to the survey, the term insurance price index value has escalated by 1%, taking the index price to Rs 22,750 in Quarter 3, 2021. In Quarter 2, 2021, the term insurance index value was Rs22,526. As per the term insurance price index trend, the total index value for term insurance has increased by 3.8% in the span of 9 months. The average annual premium payable for a sum assured of Rs 1 crore has gone up to Rs 29,127 in the third quarter, 2021 compared to Rs 29,010 in Quarter 2, 2021.

“It is great to see that the prices have not increased despite the fact that the insurance industry was hit by record Covid19 claims and losses. Although the pandemic has resulted in a higher incidence of claims, there is an increased awareness of the need for insurance amongst the Indian population which should provide the impetus to help the industry grow faster,” Naval Goel, founder and CEO of PolicyX.

In the last past three months, out of the 10 insurers that are part of the index computation, four insurers have hiked premiums while two exhibited a significant increase between 10.6% to 12.6%. Contrary to this trend, one insurer has even reduced premium by approximately 10% for term plans.

The escalated index value of term insurance has impacted uniquely across all age groups as the highest impact of increased prices were felt by the age group of 35 and above male category with a 3.9% increase in the index value. On the contrary, the female category of 55 years and above experienced relaxation with a 1.6% reduction in premium prices in quarter 3, 2021.

Further talking about gender difference, the term insurance price index quarter 3, 2021 observed the premium variation of 20.7%, where the male audience paid a higher premium than the female audience.

The data also showed that delay in purchase of term insurance plan by 10 years could cost on an average 47% dearer for a 25-year-old, 72% dearer for a 35-year-old, and 78% dearer for a 45-year-old.

The mentioned premium prices are averaged from 10 leading insurance companies for various age groups i.e. 25 years, 35 years, 45 years and 55 years for both genders and smokers & non-smokers category and for a sum assured of Rs 50 lakh and Rs 1 crore.

Health Insurance

The health insurance price index maintained tranquillity with no change in the index value in Quarter 3, 2021. The health insurance price index has been persistent at Rs 25,124 since quarter 4, 2020. This is the result of no price hike in the 5 health insurance companies forming the part of the index. Although there were numerous media reports suggesting an imminent hike in health insurance premium prices due to the catastrophic pandemic, the data seems to suggest that none of the 5 companies has changed their prices.

The average payable premium by a 26-year-old across categories was Rs 16,695 for Rs 10 lakh sum insured amount and Rs 13,140 for a Rs 5 lakh sum insured highlighting the fact that premium does not increase proportionately with sum insured. From 5 lakh to 10 lakh sum insured, there is a hike of only 27% in premium compared to a 100% increase in sum insured.

The data highlights the fact that adding members to the family floater policy does not increase the premium proportionately. In fact, there is an increase of premium of 50% on an average on adding 1 more adult of the same age or lower age in the same policy. The increase is meager (11.9% and 13.7% on adding 1st child and 2nd child respectively) on adding children to the policy.