Term plans are the most basic form of life insurance coverage. You pay a premium annually and in exchange for the payment, your family is promised a sum of money in the case of your sudden death. This sum of money is determined at the time of purchase. This sum is then disbursed once the claim is processed.
Since, term insurance is purely based on coverage for a specific event, the premium you would have to pay is very low. This means you get more coverage for a lower price, making term insurance a cost-effective tool to safeguard your family’s financial needs. Similar to other types of insurance, you have to pay an annual premium. In other types of insurance policies, as long as you pay your premium, the policy remains active. However, that is not the case when it comes to term insurance. A term insurance policy has a fixed term. After the term is over, you will have to buy a new policy altogether. If you are someone that has dependents to provide for, a term insurance plan should be a top priority.
Out of all the term insurance benefits offered by the plan, the one that stands out most is the low premium. However, the current scenario may change and hence, it is necessary that you keep a track of the latest trends and buy a term insurance when the premiums are low.
Hike Projected in Term Insurance Premium
Several insurance providers are looking to increase their prices for term insurance. This means that if your looking to buy term insurance, you may have to prepare yourself for a much higher price than usual.
This development is more likely each possible day as the players in the re-insuring department have increased premium rates. Since, all the domestic insurance providers offer protection plans supported by re-insurers, the premium that you may be charged has a high chance of being affected. In fact, there was a change in the premium for term insurance at the start of the financial year 2020-2021 due to the same reason.
More importantly, the magnitude of the change in premium rates that the re-insurers make is quite similar to the level of change in the premium that you would have to pay. However, some insurance providers did not let the premium rate change affect their price offering for their customers. But, there may be a chance that these insurers will be acting on the change soon. This would mean that the price for your policy that you paid last year may not be the same that many others would have to pay this year.
The previous year saw some changes in premiums offered by insurance providers. However, they were not present across all providers. The ones that did make a change in the premium changed it within the range of 5% to 40%. One of the biggest reasons for this was the COVID-19 pandemic. Because of higher number of infections, many patients could not be saved. This led to the rise in the number of term insurance claims as well. As a result of the higher mortality translating into the higher number of claims, the term insurance premium prices were raised. However, due to continuous precaution, the infection along with the mortality rate dropped. With this, the driving factor for the rise in premiums as not strong enough.
Nevertheless, due to the second wave of the pandemic and other factors raising the mortality rate overall, the risk of higher premiums seems renewed. Hence, before the conditions take into effect, it is better to buy a suitable term insurance. Consider the various factors and make a wise decision that will safeguard your family.
