PremiumMUMBAI: Term insurance and health insurance schemes have undergone a major shift when it comes to premium prices, age category, etc., in the months of April, May and June 2021, according to Insurance Price Index data for the second quarter of 2021 compiled by PolicyX.com, an insurance web aggregator.
Unlike the first quarter (Q1) of 2021, the Health Insurance Price Index witnessed a major shift in Q2 with an increase of 4.87%, marking a surge in insurance premium prices to ₹25,197 in the index value. The index of health insurance had been constant in the previous two quarters, namely Q4FY20 and Q1FY21 at ₹24,026, according to the report.
A few health insurance companies didn’t increase their premium prices in the last couple of years and then the radical increase in the number of claims due to covid-19 has led to this change. Moreover, the additional coverage of several diseases such as mental disorders, genetic diseases, neuro-related disorders, psychiatric disorders, etc., is responsible for the sharp increase in health insurance premium prices.
Analysing the impact segment-wise, then, the highest surge is witnessed in the premium prices of the two adults category, i.e., 5% followed by the two adults and one child category, i.e., 4.3%. Alongside, the average premium prices plummeted by 9.3% for the 46 age group and 10 lakh sum insured category, according to the report.
In Q2FY21, the major price change was undertaken by three insurance companies with 24.5% being the highest increase, followed by 9.8% and 0.7%. However, the remaining three insurers refrained from any kind of increase in their premiums, the report said.
The premium prices for health insurance are average prices taken from the leading six health insurance companies for all age groups, i.e., 26 years, 36 years, 46 years, and 56 years. This includes all coverage types—one adult, two adults, two adults and one child, and two adults and two children.
Besides, the constantly increasing Term Insurance Price Index has once again reflected a change with a 2.79% surge, taking the average price of term insurance premium to ₹22,524 in Q2FY21.
The term insurance average price of ₹1 crore sum insured reached ₹29,007 in the previous quarter.
With the latest shift, the term insurance space has witnessed a cumulative surge of 7.29% between Q4FY20 and Q2FY21 in India.
The unrelenting impact of covid 19 in India has resulted in a drastic impact on the term insurance category with an exceptional rise in mortality rate.
Segregating the impact into different categories, males, in the age bracket of 55-years, top the chart in the list of premium increases by 3.3%, the highest jump among all age groups. Conversely, the average premium for the female age group of 25-years increased to ₹9,307 in Q2FY21, accounting for the lowest increase in premium prices at 1.4%.
In Q1FY21, four out of 10 insurers increased their premium values by approximately 24.5%, 3.7%, 1.6%, and a minimum rise of 1.1%, respectively.
Age is the paramount factor affecting term insurance premiums. Hence, in the current scenario, delaying a term plan by 10 years will cost 46.2% higher for a 25 year old and 72.7% higher for a 35 year old person.
The mentioned premium prices are averaged from 10 leading insurance companies for age groups 25 years, 35 years, 45 years and 55 years for both genders, smokers and non-smokers categories, according to the report.
The overall insurance sector is experiencing an escalation in recent times. The unprecedented pandemic scenario has laid double pressure on the insurance sector which the industry tried hard to manage in the last few months. However, the partial pressure has to be borne by the customers as well, explains Naval Goel, founder and CEO, PolicyX.com
“Despite the price rise, customers can make the best out of their plans by making the purchase of the suitable policies at the right age. If we refer to these latest findings, then the biggest hike is spotted at the higher age and the delay in the purchase of a policy certainly reflects an impact on premium prices. Not to forget, the added premium prices of insurance plans now give added benefits and more security, hence the customer always has an edge in buying the insurance policies," Goel added.
