Term Life Insurance policy rates have been slashed down substantially. The cost of life insurance has come down by up to 40%, with Insurance Regulatory and Development Authority (IRDA) reducing the capital that insurance companies need to sell term policies.This move by IRDA has made Life protection become far more affordable.For the second time since the liberalisation of the insurance industry in 2000, there has been a dramatic reduction in term-insurance rates, making life protection a great deal cheaper.Term policies are purely life covers as against endowment policies, which have a sizeable savings component. While the premium for endowment policies will also soften, the benefit will be more apparent on term covers.
Among private life insurance companies, Kotak Life has announced new rates, while newcomer Aegon Religare has announced term rates, which, the company says, are the lowest in the industry.
Largest private life insurance company ICICI Prudential Life Insurance is in the process of lodging new rates. The chief of Life Insurance Corporation of India (LIC), the largest insurer in the country, said the Corporation may review its term rates.
Also, the revised solvency margin requirement introduced by IRDA in March has brought down capital requirement by almost two-thirds, which has helped bring down rates.”
The rate reduction is partly as a result of the reduced solvency margin requirements laid down by IRDA. A key player in both the group term life and individual term life businesses, Kotak Life is among the first life insurance companies to pass on this benefit to the consumer.
However, agents of insurance companies said it is not always possible to get the standard rates. It is very rare for a person to get standard rates above the age of 40 with a few private companies, since these companies have a very narrow range for various parameters defining good health.