Term insurance is a plan wherein the insured gets financial coverage for the periodic payments known as premium. It provides coverage over the demise of the insured person to the beneficiaries of the policy.
Due to the Covid-19 pandemic insurers have a plan under operation to increase the premium rate by 10-20% from April. Last year a couple of life insurance firms raised premium rates by 20-30% claiming the unbefitting of subsisting policies.
The plan promises to pay the life cover amount upon the death of the policyholder to the beneficiaries. On the other hand, the variants of life insurance plans like endowment or ULP do not offer maturity benefits in case if the policyholder survives the tenure mentioned beforehand.
In order to attain the insurance cover, an individual pays an amount to the insurer for the plan. Similarly, these insurers hand over the amount of premium to reinsurers to cover large risks. After the covid-19 the reinsurers have made a decision to increase the rates.
The significant concern is the magnified death claims because of the virus. The reinsurers are now alarmed to identify the reasons behind the need of buying the policy.
Currently, India’s policy structure concerning the policies is the lowest in the world. It is indeed the requirement to alter the pricing structure.
In the current scenario, an individual should consider various factors before amount fixation. These include securing the family’s future, financial goals, debt repayment, and more. One should not scramble to decide under any circumstances.
Shortly the premium amount may rise; keeping in mind the potential policyholder should assess the personal requirements. The premium will remain constant throughout the 20-30 year tenure after fixing the policy and the coverage amount.
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