Analysis and Insights from Pricing of Term Insurance
from leading insurance companies in India.
The Term Insurance Price Index has remained the same from the previous Quarter 3, 2022.
Simultaneously, the difference spotted in the Term Insurance index value was 8.73% between Quarter 4, 2021, and Quarter 4, 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 4, 2022 Term Insurance Price Index observed that the non-smoker 25-year-old female paid an average premium price of INR 6,026 and smoker female paid an average premium price of INR 8,711 for INR 50 Lakh sum assured cover. Likewise, the non-smoker 25-year-old Male paid an average premium price of INR 6,671 and the smoker male paid an average premium price of INR 9,735 for INR 50 Lakh sum assured cover.
| Age | Gender | 1 Cr | 50 Lac | Average Premium | ||
| Non-Smoker | Smoker | Non-Smoker | Smoker | |||
| 25 | Female | 10216 | 14724 | 6026 | 8711 | 9919 |
| Male | 11440 | 16549 | 6671 | 9735 | 11099 | |
| 35 | Female | 14615 | 21333 | 8607 | 12471 | 14256 |
| Male | 17397 | 25592 | 10131 | 14799 | 16980 | |
| 45 | Female | 24952 | 37414 | 14410 | 21485 | 24565 |
| Male | 30782 | 46472 | 17651 | 26550 | 30364 | |
| 55 | Female | 46720 | 71467 | 25426 | 38829 | 45611 |
| Male | 56606 | 87055 | 30673 | 47104 | 55359 | |
| Avg Premium | 26591 | 40076 | 14949 | 22461 | 26019 | |
*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.
All 5 companies forming the part of the index have shown an increase compared to the same quarter last year (i.e., Quarter 4, 2021). The increase in prices ranges from 5% at the minimum to 19.5% at the maximum resulting in an increase of 13.28% on an average.
Analyzing on the basis of the age factor, the Term Insurance premium price variation widened with the increasing age of an individual in the Fourth Quarter. Delaying a purchase of a term policy by 10 years could cost on an average 48.6% higher for a 25-year-old, 75.8% higher for a 35-year-old, and 83.8% higher for a 45-year-old. There is no change in Q4 2022 from previous quarter (i.e., Q3 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 | 75.85% |
| 45-55 | 83.82% |
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 4, 2022 observed a premium variation of 20.6% 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 4, 2022, 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 51.15% higher premium when covered for 1cr 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 March, 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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