Analysis and Insights from Pricing of Term Insurance
from leading insurance companies in India.
The Term Insurance Price Index has increased 2.57% from the previous Quarter 4, 2022.
Simultaneously, the difference spotted in the Term Insurance index value was 5.32% between Quarter 1, 2023, and Quarter 1, 2022.
Term Insurance Prices, being highly vulnerable to external factors such as competition, mortality rate, and demand, often lead to the change in the average premium prices. The premiums indicated in the illustration are the average premium prices taken from the top 5 life insurance companies.
The Quarter 1, 2023 Term Insurance Price Index observed that the non-smoker 25-year-old female paid an average premium price of INR 6,112 and smoker female paid an average premium price of INR 9,502 for INR 50 Lakh sum assured cover. Likewise, the non-smoker 25-year-old Male paid an average premium price of INR 6,832 and the smoker male paid an average premium price of INR 10,674 for INR 50 Lakh sum assured cover.
| Age | Gender | 1 Cr | 50 Lac | Average Premium | ||
| Non-Smoker | Smoker | Non-Smoker | Smoker | |||
| 25 | Female | 9,688 | 15,329 | 6,112 | 9,502 | 10,158 |
| Male | 10,862 | 17,173 | 6,832 | 10,674 | 11,385 | |
| 35 | Female | 14,153 | 22,243 | 8,751 | 13,446 | 14,649 |
| Male | 16,827 | 26,429 | 10,319 | 15,904 | 17,370 | |
| 45 | Female | 23,741 | 37,432 | 14,603 | 22,724 | 24,625 |
| Male | 29,581 | 46,864 | 18,051 | 28,247 | 30,686 | |
| 55 | Female | 46,773 | 74,303 | 26,141 | 41,255 | 47,118 |
| Male | 57,159 | 91,056 | 31,665 | 50,139 | 57,505 | |
| Avg Premium | 26,098 | 41,354 | 15,309 | 23,986 | 26,687 | |
*Source: Average prices have been determined from the leading 5 Term insurance companies in India. These prices are for illustration purposes & the actual price may vary depending on the insurer, age, gender, health condition, Sum Assured & Coverage type.
Overall the term price has increased by 2.57%, however some companies have increased the prices and some companies have also reduced the prices. Hence, the trend was not homogeneous across companies.
Analyzing on the basis of the age factor, the Term Insurance premium price variation widened with the increasing age of an individual in the First Quarter. Delaying a purchase of a term policy by 10 years could cost on an average 48.6% higher for a 25-year-old, 72.7% higher for a 35-year-old, and 89.1% higher for a 45-year-old. There is 2.56 % change in Q1 2023 from previous quarter (i.e., Q4 2022)
Following are the shifts observed in premiums payable at a difference of 10 years:-
| Age Brackets | % Change in premium prices |
| 25-35 | 48.62% |
| 35-45 | 72.75% |
| 45-55 | 89.15% |
As per the insurance norms, the male audience carries a higher risk of life than the female audience. Thus, the Term Insurance Price Index Quarter 1, 2023 observed a premium variation of 21.12% in terms of gender. The male category seems to pay higher term insurance premium prices vis-a-vis the female category.
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Calculate NowAnother remarkable factor to cast an impact on the Term Insurance Premium price is the smoking habit of an individual. In Quarter 1, 2023, the smoking habit has laid a larger effect in the higher age group categories of both, male & female categories.
In terms of habits, a male smoker pays 58.63% higher premium when covered for 1 Crore as compared to a non-smoking person.
The prices and charts displayed above are based on the average premium prices of the top 5 life insurance companies in India in terms of their GWP. The companies considered in our analyses are Kotak Life Insurance, HDFC Life, ICICI Prudential, Max Life, and Bajaj Allianz Life.
The prices represent the average annual premium payable (as of the quarter ended June, 2023) against a sample profile based on age, gender, and smoking status. In addition, the analyses also factor in the sum assured and the policy type (Term Insurance) for a comprehensive evaluation. It is important to note that the insurer's individual rate may vary depending on age, gender, health profile, sum assured & coverage type.
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