Hyderabad: With Covid numbers continuing to surge, people are paying a heed to buy term and health insurance policies with focus on having a right-sized protection.
The term insurance segment this year so far has grown about 50 per cent over last year while health insurance has seen a growth of 60-70 per cent over last year. The trend is likely to continue in these two segments in days to come, according to Santosh Agarwal, chief business officer, Life Insurance, Policybazaar.com, an insurance aggregator.
The annual average premium now is about Rs 22,000 compared to Rs 25,500 a year ago. The average cover size has fallen from Rs 92 lakh to Rs 87 lakh. This fall in average sum assured is attributed to the people opting for covers below Rs 1.5 crore, which are given based on telemedicals. “Policies above Rs 1.5 crore need people to get medical tests done. But people are not willing to visit them due to the Covid situation,” she said.
Agarwal said persistency, or the ratio of continuation of policies, in term insurance products continue to be around 90 per cent. Term insurance segment took shape in 2009 with Aegon launching its first online product. The trend caught buyers’ fancy in 2015 when more players started looking at term insurance products seriously. Since then, the segment has been growing at more than 100 per cent till recently, she said.
“We believe term and health insurance products have to be mandatorily included in financial planning. They offer big covers at relatively lower prices,” she said. The claim settlement ratio is about 97 per cent and some companies have even fared at 99 per cent.
Till last year, more than 50 per cent people buying term insurance opted for limited pay products that allowed them to pay premium only for a limited period but enjoy the cover benefits for long. Now, about 35 per cent are opting for these covers and the rest are willing to pay for the full term of the cover. “With salary cuts happening, people are looking at paying a lower premium,” she said.
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