Alert! Insurance premiums for term plans become dearer; get ready to pay more

If you are planning to buy a term plan, then you really must know this big development that is going to hit your pocket. Term plan premiums of many life insurance companies have gone up significantly. Most companies have increased the premium amounts for the policies by 20 per cent.

Many companies will be raising premiums in June. The number of death claims in the last 12 months has seen a sharp spike. Massive changes in claim patterns have forced the re-insurance companies to raise the premium amounts. This has directly impacted the insurance companies forcing them to increase the premiums. However, this move will not impact the existing customers.  

Term Insurance dearer by 20 per cent

Most companies have raised insurance premiums
Many companies have still not increased premiums but are likely to increase in June
Term plan of ICICI Prudential has become costly by 20 per cent
Other private insurance companies have increased premiums between 10 and 20 per cent

Why have premiums increased?

The death claims filed by policy holders have risen significantly in 6-12 months
Reinsurance companies increased premiums after sudden surge in claims overhauls in the claim
New policy holders will have to pay more premium
There will be no impact on previous policies
Companies have been selling term insurance plans amid lockdown
Tele medical and AI data helping in underwriting policies

Term insurance

A term insurance plan is very important for any individual and is one of the most important aspects of financial planning. It is a safety net and can be useful for the entire family in the event of a mishappening. However, you should know that this is not an instrument which will give you return on maturity.

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In term plans, the policy holder is required to pay insurance premium for a definite period. In the event of a death of the policy holder, the nominee gets the insurance amount.