Life insurance to cost less as mortality rate declines
With a significant fall in the mortality rate in India, the cost of life insurance premiums is set to come down to a comfortable level.
New Delhi: With a significant fall in the mortality rate in India, the cost of life insurance premiums is set to come down to a comfortable level. All working professionals in the age group between 22 and 50 have reason to cheer, as they have to pay less premium in the coming fiscal starting from April 1, 2019.
According to the revised Indian Assured Lives Mortality Table 2012-14, conducted by the Institute of Actuaries of India (IAI), mortality rates among the insured, for those aged between 22 and 50 years, fell 4 per cent-to-16 per cent in 2012-14 from 2006-08. Earlier, the industry was using the 2006-08 table as the reference frame for pricing life insurance products. Now the new data will be used for reference. The Mortality Table has been tabulated on the basis of data from 24 life insurance companies for the period of investigation, from April 1, 2012 to March 31, 2014.
Reacting the development, a top official in a public sector life insurance company told Financial Chronicle, “We need to be cautious about the survey, based on which we may review the tariffs within some age bracket. I think that the working-age professionals may have to pay less to buy life insurance in the next fiscal year, with the industry switching to the latest statistical tables on mortality to review the rates it charges for covering lives.”
However, industry experts feel that the persons in the 22-50 year age group could see a reduction in term-cover premiums from April 1, while premiums may rise for older consumers as mortality rates increased 3-21 per cent in the 82-105-year age bracket.
“The mortality table reflects that the proposed premium will depend on and vary from company to company, and it may also come down after a thorough review of concerned insurance firms, depending the age group of the person. However, we have seen that it has been an annual affair in some foreign countries, but in India, it may be carried out every five years or so,” said another chief executive of a private life insurance firm.