PolicyX.com, a leading web insurance aggregator, announces the data of ‘Insurance Price Index’- Life Insurance & Health Insurance for Quarter 4, 2021 highlighting the prominent changes that occurred in the insurance prices.
With the incessant effect of COVID19, the Indian Insurance Industry has been experiencing adversity in terms of claims, which is casting direct pressure on consumers due to the surge in premium prices by the re-insurers.
In Quarter 4, 2021, the Term Insurance Price Index Value has gone up by 4.18%. The index value has reached the new figures of INR 23,929 in this quarter. The PolicyX.com report marks a huge difference of 9.75% in the term index value between Quarter 1, 2021 and Quarter 4, 2021.
This is the result of immense pressure endured by the insurers and re-insurers due to the COVID19, causing a high mortality rate faced by the country in recent times. The re-insurers and insurance companies have employed their best efforts to provide complete convenience to policyholders by settling the maximum number of cases. However, on the contrary, they were forced to hike the term insurance premium prices to manage the financial pressure. Along with that, the underwriting of term insurance prices has also gone stricter to ensure the reduction in the losses caused to the term insurance companies in the future.
Out of 5 life insurance companies, as many as 3 companies have revised their premium prices wherein the biggest increase was 13.4% followed by 4.9%, and 0.9%. The remaining 2 companies kept their premiums constant.
Analyzing on the basis of the age factor, the Term Insurance Price variation widened with the increasing age of an individual in the last quarter. Delaying a purchase of term policy by 10 years could cost on an average 48.9% more for a 25-year-old, 77.6% higher for a 35-year-old and 80.8% higher for a 45-year-old.
In terms of habits, the smoker male paid 50.5% higher than a non-smoker male and a smoker female paid 49.5% higher than a non-smoker female in the last quarter. Habits seem to have a considerable effect on premiums for both genders.
The mentioned premium prices are averaged from 5 leading insurance companies for various age groups i.e. 25 years, 35 years, 45 years and 55 years for both genders and smokers & non-smokers category and for a sum assured of INR 50 lakh and INR 1 crore.
The Health Insurance Price Index followed the trend of previous quarters and maintained a similar index value in Quarter 4, 2021 as well. The index value of the Health Insurance Price Index has been constant at INR 25,124 since Quarter 1, 2021 till Quarter 4, 2021 reflecting no change in the premium prices of health insurance.
In Quarter 4, 2021, an average person of 26 years paid INR 8,274 premium annually for INR 5 Lakh sum insured and INR 10,403 premium annually for INR 10 Lakh sum insured for 1 Adult category.
The health insurance premium does not increase proportionately with the sum insured amount. Quarter 4, 2021 showcases that a 36-years-old male paid INR 9,519 for the sum insured of INR 5 lakh and the same person paid INR 12,183 for the sum insured of INR 10 lakh on an average. In this case, the premium increased only 28% in spite of a 100% increase in the sum insured.
Since it has become quintessential to secure every member of the family under health insurance for financial aid regardless of their age, therefore, buying a family floater plan stands out as a cost-effective option. As the addition of another member in the floater plan leads to a minimal increase in the premium. As per the Quarter 4, 2021 report, a premium paid for 2 Adults of 36-years old was INR 13,921 and the premium paid for 2 Adults and 1 Child of the same age category was INR 16,530 for INR 5 lakh sum insured.
Of the 5 companies, forming the index, the variance observed in premiums among the health companies is quite high (ranging from 59% to 76% for different age groups) as compared to variance observed in term insurance companies. This is primarily because of the fact that coverage, features, and benefits differ significantly for health insurance whereas term insurance is usually simple with similar benefits in case of death.
The premium prices for Health Insurance are average prices taken from the leading 5 health insurance companies for all age groups i.e, 26 years, 36 years, 46 years, and 56 years & all coverage types i.e, 1 adult, 2 adults, 2 adults + 1 child, and 2 adults + 2 children.
Commenting on the latest report, Mr. Naval Goel, Founder & CEO, PolicyX.com stated, “Contrary to the constant media reports of price increases, the data shows that very few companies have raised prices and the insurance companies have been benevolent towards customers by increasing premium prices gradually. However, the constant increase in claims has also resulted in the tightening of underwriting norms. For the consumer, our message remains the same: “Buy Adequate Cover Now – Delaying Purchase can Cost Dearly”
With the latest Quarter 4, 2021, PolicyX.com marks the first anniversary of the Insurance Price Index that started with Quarter 4, 2020.
On this, Mr. Goel expressed, “We started this initiative- ‘Insurance Price Index’ during the same time last year to keep the consumers aware about various changes taking place in the insurance sectors- Life & Health, especially Premium Prices i.e. the foremost deciding factor in a price-sensitive country like ours. We are happy and thankful that our initiative has been well received by the industry, customers, and the media”.