Different Pricing for Term Insurance
Hi Team Beshak,
I was planning to buy a Plain Term Insurance for me, but the Annual Premium Amount varies widely among different insurers, it costs something around 10-11000 if I buy a plan from Icici/Hdfc while the same plan costs me approx 6-7000 with Aegon and the difference is quite substantial if we take in the time period for which a person buys insurance, nearly about 40 years.
So, I am really baffled by such a difference, can you please help/guide me why such a difference exists or is there something else which I am missing.
PS: I have taken the same insured amount+years+without any rider for comparing all the plans.
Very genuine question. Apart from the cost of risk , the premium calculation also has cost element which is company / product specific such as commission rate , product feature, expected lapsation rate , claim experience , the reinsurance cost etc. Some new age company may be even taking a calculated risk of offering lower premium to get market share. My suggestion would be to choose the lowest premium ( having same product feature) among the top 5/6 established company.
Hello Tushar,
Just adding to what Mr. Pandey and Mr. Sathish mentioned.
We struggled with the same question. When the product is so simple, and prices are so varied - how do you decide on which plan to buy will depend on the Claims Track record, Service excellence, and the customizations offered by the insurance company. This is precisely the reason why we launched Beshak Ratings. This tool allows you to sift through the noise and look at insurance companies in a different light.
Dear Tushar,
Usually the insurers revise the premiums upwards to adjust for the claims paid out. The premium for older and bigger insurers with more number of policies and claims would be relatively higher as compared the the insurers who have higher number of policies and claims.