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Term Insurance Price Index

Analysis and Insights from Pricing of Term Insurance
from leading insurance companies in India.

The Broader Picture

Overall Picture

Cost of Term Insurance on the rise as Q2 2021 ends

The index price of term insurance increased by 2.79% from Rs. 21,913 in Q1 2021 to Rs. 22,524 in Q2 2021. Though, it is still lower than the 4.38% jump witnessed in the previous quarter. Overall, the insurance space in India saw a considerable 7.29% surge in the pricing of term insurance in the span of Q4 2020 to Q2 2021.

While the average annual premium payable for a sum assured of Rs. 1 Crore was Rs. 28,274 in the recent past, it has now increased to Rs. 29,007, as of Q2 2021. Please note that this is an illustrative example based on multiple variables such as age, gender, and tobacco usage. Actual values will differ materially as per the plans chosen and personal information.

Overall Picture
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Q4 2020 vs Q1 2021

Noticeable Shifts in Pricing per Age & Gender in Q2 2021

Q4 2020 vs Q1 2021

Premiums tend to vary significantly based on the age of the buyer. The lower the age, the lower is the premium. In the latest quarter of 2021, premium prices have witnessed growth in a relatively similar fashion across all age groups. Notably, males in the age bracket of 55-years saw the premiums increase by 3.30%, the highest jump among all age groups. On the other hand, the average premium for the female age group of 25-years increased from Rs. 8,575 in Q1 2021 to Rs. 8,698 in Q2 2021, accounting for the lowest hike at 1.43%.

Average Premium Pricing: Segment Wise Category

Life insurance companies tend to periodically update their premiums to establish a competitive edge over other players, while also ensuring that they are offering the most favourable pricing to potential buyers. The premiums indicated in the illustration are the average premium prices taken from the top 10 life insurance companies.

Currently, a non-smoker 25-year-old female has to pay an average of Rs. 5,360 for a life cover of Rs. 50 Lakhs and Rs. 8,889 for a cover of Rs. 1 Crore, annually. As is evident from the table, the premium increase is not particularly linear. Most life insurers offer discounts on high sums assured therefore, the premiums in some cases might be lower for a sum assured of Rs. 1 Crore than that for a cover of Rs. 50 Lakhs.

50 Lac 1 Cr Average Premium
Age Gender Non-Smoker Smoker Non-Smoker Smoker
25 Female 5360 7619 8889 12923 8698
Male 5987 8691 10128 14864 9917
35 Female 7348 10926 12524 18846 12411
Male 8583 13050 14860 22740 14808
45 Female 11947 18405 21136 32498 20997
Male 14558 22624 26005 40845 26008
55 Female 20635 34195 38424 63970 39306
Male 24974 41768 46926 78536 48051
Avg Premium 12424 19660 22362 35653 22524

*Source: Average prices have been determined from the leading 10 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.

Insurer Wise Average Premium

Average Premium Pricing: Insurer Wise Category

Insurer Wise Average Premium

Of the 10 leading life insurance companies considered in this analysis, four insurers raised their premium prices in Q2 2021. The highest jump recorded was 24.46% and the lowest reported was 1.10%. Two other life insurers raised their premiums for term insurance by 3.71% and 1.60%. It is worth nothing that the hikes have been considerably lower in this quarter as compared to Q1 2021. The other six insurance companies kept their premium prices the same as that in the last quarter.

Average Premium Pricing by Age

Average Premium Price Age

Delaying a term plan purchase can cost dearly

Premium prices increase exponentially as we age. Delaying a term plan purchase by 10 years costs on an average 46% higher for a 25-year-old and 73% higher for a 35-year-old. People above the age of 55 have to pay nearly 4.6 times more than what a 25-year-old is paying. Therefore, it is always better to enter into a term plan early and lock in the prices. Typically, people cover themselves up to the age of retirement.

Further, with the quarterly trend in the term insurance price index on the rise, it is now more crucial than ever to not delay the purchase of term plans any longer.

Following are the shifts observed in premiums payable at a difference of 10 years:-

Age Brackets % Change in premium prices
25 to 35 46.22%
35 to 45 72.69%
45 to 55 85.85%
Average Premium Price Age
Average Premium Prices Gender

Average Premium Pricing By Gender

Average Premium Prices Gender

Insurance companies continue to perceive males at a higher risk than females. In fact, based on the global mortality rates observed by the World Health Organization, male mortality rates have been reported to be higher than females in the last few decades. Therefore, the average cost of a male insured is 21.34% higher than that for a female insured, in the case of a term plan.

Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6345642/

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Along Premium Smokers & Non-Smokers

Average Premium Pricing by Smoking Status

Along Premium Smokers & Non-Smokers

Along with age and gender, the price of a term plan is also affected by smoking habits. On an average, male smokers pay 59.92% more than their non-smoking counterparts, while female smokers pay 57.91% more.

The highest impact has been observed in the 55-year age bracket. Males represented a 67.32% increase and females accounted for a 66.21% increase in regular premium prices for being smokers. The least affected group was 25-years-old females who observed a hike of 44.16% in their respective premium prices for being smokers.

Further, on an average, while a smoker male had to pay Rs. 29,430 as annual premium for term insurance in Q1 2021, the amount has now increased by nearly 3.26% to Rs. 30,390.

Index Computation Methodology

The prices and charts displayed above are based on the average premium prices of the top 10 life insurance companies in India in terms of their GWP. The companies considered in our analyses are LIC of India, SBI Life, HDFC Life, ICICI Prudential, Max Life, Bajaj Allianz Life, Aditya Birla Sun Life, Kotak Mahindra Life, Tata AIA Life, and Canara HSBC OBC Life.

The prices represent the average annual premium payable (as of the quarter ended June 2021) 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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