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Published on 31/07/2020 12:29:54 PM | Source: ICICI Securities Ltd

Term protection price hikes lower for`return of premium` segment

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Life insurance

Term protection price hikes lower for ‘return of premium’ segment

Prices of term protection plans have been steadily hiked by most life insurers. We compare term pricing (without and with return of premium options) for major insurers over the past three months. The rate increase has been relatively less for return of premium (RoP) products. With RoP accounting for ~80% of protection mix, SBI Life has until now managed to avoid price hikes and Max Life has taken small hikes. Tata AIA has taken most aggressive hikes across its suite of products followed by IPRU Life and HDFC Life.

 

Term pricing (without return of premium):

We compare a range of sum insured from Rs5mn to Rs50mn. We have indexed all rates to old premium on Rs5mn sum assured, without return on premium for IPRU Life, which we take as 100 on our scale.

* TATA AIA has taken price hike in the range of 26% to 47%.

* SBI Life has not taken price hikes between Apr’20 and Jun’20.

* IPRU Life has taken price hikes in lower sum insured buckets while HDFC Life has taken prices in higher.

* Max Life has taken muted price hikes in lower sum insured buckets only.

 

Term pricing (with return of premium):

We compare a range of sum insured from Rs5mn to Rs50mn. We have indexed all rates to old premium on Rs5mn sum assured, without return on premium for IPRU Life, which we take as 100.

* Most companies have announced limited price hikes in the RoP category apart from Bajaj Allianz (BALIC). BALIC announced a hike of 39% in Jun’20 with life cover of Rs5mn and Rs10mn as it had a low base.

* TATA AIA has hiked rates by 14% across segments. IPRU has taken price hikes in the range of 11-16%. SBI Life and PNB Metlife have not increased rates.

 

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