The Insurance Regulatory and Development Authority (IRDA) has reduced the capital requirement for selling term plans. This has reduced the cost of premium by 40% on the term insurance.
Term insurance only has administrative and mortality charges, no investment component like ULIPs. Hence they are not exposed to market risk. It follows that the capital adequacy requirement for both these products cannot be same; the risk levels are totally different.
Fortunately the regulator realized this, came up with the regulation that should have come earlier. Better late than never…
Many private players have already started passing this benefit to their customers.
Most of the Indians do not have life insurance cover and those who have are mostly under-insured. The regulator’s step of decreasing the premium of term insurance will increase insurance penetration and enhance the growth opportunities of the insurance sector.
Another very important result: The reduction in the premiums will leave the investors with a surplus for investments.
November 19th, 2008 at 6:00 pm
Term insurance was anyways the cheapest policy. Now its really going to become cheap which will help the economically weaker section of the society to be able to avail an insurance cover. This will help the insurance companies to grow as more people would now want to be insured.
December 18th, 2008 at 1:19 pm
I think every Indian should be first covered under Personal Accident policy since this is the cheapest form of insurance and it has a great coverage. Then if a person need insurance then he should go for health insurance and after that term insurance. This is what the best financila planners practice says have read some where.
December 18th, 2008 at 2:37 pm
I agree with Manisha….one needs to understand having a health insurance is of dire need in todays world…and term assurance can also be bought along….with the term assurance getting cheaper will definitely attract more people…i believe people hesitate buying such plans due to absence of any investment opportunity…however they need to understand that money is not everything if one is in sound health can earn double.
December 18th, 2008 at 2:41 pm
Term assurance was always the cheapest plan available and still couldn’t attract any crowd…by making it further cheaper could only ignite hope of getting more customers.However unless people start considering their health above wealth the same of term plan would not increase.
December 18th, 2008 at 2:46 pm
Term assurance assures payment if death occurs during the term of the plan to the beneficiaries or dependants….it never pays if the insured survives during the term of the plan and the plan cease to exist on the expiry date without any repayment…now i am sure this doesn’t interest anyone…where is the cream? One wants returns on investment and doesn’t want their money to go in vain…they would give up the security of their loved ones for their selfish means….i think its high time people in India rise and understand the importance of insurance.