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Term Insurance Price Index

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

Broader Vision

Overall Picture

The Term Insurance Price Index marked a considerable jump with a 5.9% surge in the premium value in Quarter 1, 2022. The index value increased to INR 25,340 in this quarter from INR 23,929 in Quarter 4, 2021. Simultaneously, the difference spotted in the Term Insurance index value was 16.2% between Quarter 1, 2021, and Quarter 1, 2022.

Experts have attributed this surge to an attempt to manage financial pressure caused to the insurers and reinsurers, due to the continuous incidence of Covid related claims in the previous quarter; leading to a similar trend of price hike in Quarter 1, 2022.

Overall Picture
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Average Premium Price- Sum Assured

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, 2022 Term Insurance Price Index observed that the non-smoker 25-year-old female paid an average premium price of INR 5,867 and smoker female paid an average premium price of INR 8,472 for INR 50 Lakh sum assured cover. Likewise, the non-smoker 25-year-old Male paid an average premium price of INR 6,489 and the smoker male paid an average premium price of INR 9,463 for INR 50 Lakh sum assured cover.

Age Gender 1 Cr 50 Lac Average Premium
Non-Smoker Smoker Non-Smoker Smoker
25 Female 9943 14314 5867 8472 9649
Male 11120 16071 6489 9463 10786
35 Female 14252 20765 8367 12107 13873
Male 16919 24864 9846 14356 16496
45 Female 24783 37114 13988 20835 24180
Male 30513 46053 17115 25706 29847
55 Female 45404 69357 24616 37563 44235
Male 54973 84425 29681 45530 53652
Avg Premium 25988 39120 14496 21754 25340

*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.

Premium Revision- Insurers

Of the 5 insurers forming the price index, 2 insurers hiked premiums in Quarter 1, 2022, whereas, the other 3 insurers remained their premium prices constant in the same tenure for term insurance plans. The biggest jump witnessed in the term insurance prices was 21% followed by 11% in the first quarter of 2022.

*Note: SBI Life Insurance, TATA AIA Life Insurance, Aditya Birla Sun Life Insurance, Canara HSBC OBC Life Insurance & Life Insurance Corporation of India have been removed from index computation due to the unavailability of data.

Premium Price Variation- Age

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, 77.9% higher for a 35-year-old, and 81.1% higher for a 45-year-old.

Average Premium Price Age

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

Age Brackets % Change in premium prices
25-35 48.6%
35-45 77.9%
45-55 81.1%
Average Premium Price Age
Average Premium Prices Gender

Premium Price Difference- Gender

Average Premium Prices Gender

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, 2022 observed a premium variation of 20.5% 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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Along Premium Smokers & Non-Smokers

Premium Price Payable- Habits

Another remarkable factor to cast an impact on the Term Insurance Premium price is the smoking habit of an individual. In Quarter 1, 2022, the smoking habit has laid a larger effect in the higher age group categories of both, male & female categories.

Along Premium Smokers & Non-Smokers

In terms of habits, a smoker pays 50.53% higher premium when covered for 1cr as compared to a non smoking person.

Index Computation Methodology

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, 2022) 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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