The highly contagious nature of covid-19 sparked fear amongst people and consequently, an increase in demand for life insurance policies all around India. Owing to this, the premiums for term insurance policies have seen a hike off late, across tenures, especially considering increasing mortality rates, amongst several other factors.
What is term insurance
Term insurance policies are a complete insurance plan wherein a fixed amount is paid to beneficiaries if the insured passes away. These plans offer a lot of coverage for a reasonably low price.
How are term insurance premiums calculated
Premiums for term insurance are determined by factoring in mortality rates and the likelihood of potential claims (future claims). If the disparity between real and anticipated future claims is significant, premiums can be raised to close the gap. Interest rates also play a significant role- when the interest rates fall, the premium for term insurance typically sees a rise.
Rising premium and the demand for term insurance plans
Despite the premiums, demand for term insurance policies has increased, owing to the dread sparked by the covid-19 pandemic. Most insurers claim that, because of increased awareness, the price increase would have little impact on demand in the medium to long term. According to them, the rise in premiums hasn’t deterred customers from actively finding adequate coverage. In the midst of the pandemic, family safety has become the most important factor, taking precedence over frugality.
Why should one consider a term insurance plan in spite of a slight hike in premiums
In these unprecedented times, going for a term insurance policy is important because it guarantees a stable financial future for the family in the event of any unforeseen circumstances. Aside from providing financial coverage to the family, a term insurance contract provides a slew of other advantages, such as reduced premium costs, extra rider incentives, and so on.
Term insurance policies provide financial protection to the beneficiary’s families in the event of the policyholder’s death, as well as discretionary compensation for serious diseases and accidental death.Use term insurance calculator to calculate term insurance premium onnline now. Term insurance policies have many advantages, including low premiums, life coverage and financial protection, and income tax advantages. In spite of the recent hikes in term insurance premiums, it’s still the relatively more affordable insurance, and provides substantial coverage. However, in order to get the most out of a term insurance policy, it’s also important to understand the benefits of term insurance so that, with so many insurance providers to choose from, you can find the policy with the most benefits and choose the right term insurance policy.