IRDA data shows that the number of insured lives under group scheme is 7.8 crore against 6.5 crore in the corresponding period last year.
At a time when life insurance premium collection is shrinking by 6 percent for the second consecutive year, the numbers of lives covered under group scheme has increased by 20 percent in the financial year 2012-13. Insurance experts have attributed this increase to rising demand of term insurance policies.
In term insurance, the premium payment is comparatively very less than whole life insurance policies. There are five types of term insurance policies i.e. pure term plan, return of premium plan, decreasing plan, increasing plan and convertible plan. However, these policies can only be claimed on death of the policy holders, provided that death occurs within the pre-specified time period. The policy doesn’t provide any returns like whole life insurance policies which also used as saving instruments.
IRDA data shows that the number of insurance covered under group scheme is 7.8 crore against 6.5 crore in the corresponding period last year. Private underwriters have registered 24 percent growth in group insurance category by covering 3.4 crores people this year against 2.7 crore of last year while LIC has showed a growth of 15 percent by adding 58 lakh new folios.
GN Agarwal, CEO of Future Generali Life Insurance told Cafemutual that the transformation in the industry is due to product change. Earlier, the investors relied more on traditional policies like whole life insurance and ULIPs but over the last few years the demand has shifted to term insurance policies which offer life cover at relatively low premiums.
Hitesh Nagda, insurance advisor from Mumbai said that the insurance premium of term insurance is comparatively less due to low commission structure and low administrative fees. These benefits are directly transformed to the policy holders in terms of higher cover. Many corporates and employers prefer term insurance policies because of low premium and limited time period, he added.