Though the deadliness of Omicron, the new Covid-19 pandemic variant, is not fully known, going by what happened during the second wave, it should serve as a reminder that life is uncertain, reinforcing the importance of life insurance.
The Omicron variant, which has put governments the world over on high alert, may have made people aware about the importance of health insurance, but life insurance is equally important. After all, the first and second waves of Covid claimed the lives of so many breadwinners.
When it comes to life insurance, term covers are the most suitable as they give maximum protection at lower premiums. Term insurance premiums are, however, expected to rise in December, according to reports, so this may the right time to take a cover or the top up the one you already have.
Rise In Term Insurance Premiums
“There has been constant pressure faced by the term insurance sector due to the higher mortality rate experienced during the pandemic, which has laid considerable pressure on the re-insurers. Therefore, to balance the losses, a leading re-insurer has decided to hike its rates due to which another round of price hike is taking place in December,” says Naval Goel, founder and CEO, PolicyX.com, an insurance comparison portal.
But how much will the rise be? “The hike can range from 20-30 per cent wherein the actual ratio will depend on the insurance service provider that how much burden they can handle and how much they would like to pass it on to their customers,” says Goel.
It is expected that even underwriting norms may be made stricter to reduce the losses, adds Goel. Some term insurance companies are focusing on giving term insurance to people with a certain income bracket and below the age of 40 years.
What Should You Do?
Life insurance is crucial and should be a top priority. Life insurance premiums going up or down should not influence one’s need to buy or upgrade life insurance. Mortality rates, which prompt insurance companies to adjust insurance premiums, are beyond our control.
“Term insurance cover, being one of the personal financial risk management tools, is a necessity. Based on the insurance needs, one should opt for term insurance cover whether or not premium rates rise in the near future. If you were planning to opt for a term insurance cover, it would be wise to analyse your insurance needs first (not choose a random amount, say Rs 1 crore or Rs 2 crore) and go ahead. Just as being under-insured is bad, being over-insured is pointless too,” says Arijit Sen, a Sebi-registered investment advisor and co-founder of Merry Mind, a Kolkata-based financial advisory firm.