- Date : 29/11/2018
- Read: 3 mins
Improved life expectancy will bring down life insurance cost, while court interventions are expected to play a role in increasing rate of health insurance
Purchasing life insurance is expected to get even more cost-effective for Indians. The credit for this goes to improved life expectancy in the country. Indians already enjoy economical life cover and a further drop will mean that more people get themselves insured.
Health insurance, on the other hand, is likely to get more expensive due to court interventions to expand coverage and include more diseases in its ambit.
Additional cover makes for an expensive health affair
Currently, health insurance companies have a long list of exclusions – pre-existing diseases such as HIV, congenital defects, mental ailments, cerebral stroke, etc. So such diseases are not covered by regular health insurance.
But now the Insurance Regulatory and Development Authority of India (IRDAI) has asked insurance companies to review their products to provide a more inclusive health cover by including the above mentioned health challenges. Insurance companies will thus have to revisit their offerings and revise prices accordingly.
As per a report by Mint, industry experts believe that health insurance cost will be affected, but only marginally. Further, the cost is not expected to go up immediately. Mint is also of the opinion that this is a constructive step that will benefit both insurers and customers.
10% improvement in life expectancy
The new mortality table, prepared by the Institute of Actuaries of India, has seen a 10% improvement, reports The Times of India. Life insurance companies base their pricing on mortality tables as they depict life expectancy. A longer life expectancy means the insured will pay premiums for a longer duration of time. This can help bring down the overall cost.
However, some experts feel insurers may choose to not lower prices as the cost of life insurance in already low in India when compared to other developing markets.
Indian life insurance market to grow
Insurance companies are bullish on the growth of the life insurance market in India. The life insurance industry is set to grow at a healthy pace of 12-15% over the next 3-5 years.
The market has the highest latent demand, with the shortfall in the amount of cover necessary to maintain the current living standards of dependents standing at US$9 trillion, according to the TOI report.
Related: Life insurance 101
Additionally, ease of buying life insurance – with just a few clicks online -- will also play a role in encouraging more people to get insurance for themselves.