Now life insurance for 40% less

MUMBAI: Life protection has become far more affordable. 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. 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.
Kotak Life Insurance managing director Gaurang Shah said: “Two
developments have led us to reduce our rates. First, we had the
opportunity to review our own claims experience, since we introduced
preferred term for non-smokers six years ago. 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.”
Aegon Religare Life Insurance, which launched operations earlier this
month, has decided to use competitive pricing on term rates as an
edge. “We had decided to introduce a product with the lowest rate,
which is also supported by our campaign. Given our pricing, it is
possible for a 30-year old to get a Rs 10-lakh cover at only Rs 166 a
month,” said Aegon Religare Life Insurance CEO Rajiv Jamkhedkar.
When contacted, LIC chairman TS Vijayan said LIC was constantly
reviewing its term rates to retain its competitive advantage and any
improvement in mortality was always passed on in the form of lower
term rates.
In a statement issued here, Kotak Mahindra Old Mutual Life Insurance
said the new rates were almost 40% lower than the old 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 Insurance is among
the first life insurance companies to pass on this benefit to the
consumer,” the statement said.
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. These parameters include weight, blood pressure and
abdominal girth, among other things.