As per insurance brokers, premium for term insurance are expected to be increased from April 10. Earlier the hike was to be effected from April 1, 2020 but amid the coronavirus led lockdowns the increase in premium cost has been deferred.
So, individuals looking to add term life insurance to their portfolio for the financial security of their family can still buy such insurance plans at current rates for the next few days.
"The term insurance premiums are likely to go up by April 10, 2020, given the increased reinsurance costs. The premiums could go up by 40 percent to 15 percent depending upon the insurer. As re-insurers have revised their cost price due to stress in their business, reinsurance premium rates have been increased for insurance companies thereby impacting premiums of term insurance plans", Agarwal-CBO-Life Insurance Policybazaar.com is quoted as saying in a leading business dailies report.
Thus, the likely hike in premium of term insurance plans is attributed to increase in reinsurance costs.
Reinsurance Cost Impacts Term Plan Premium Price
Premiums for term plans are decided based on several factors including assumption on mortality rate, age assessment as well as occupational risk. At the same time, premium cost is also based on how much risk is being transferred on to the reinsurance company.
Reinsurance companies to an extent bear some of the risk associated with term plans of life insurance companies.