Live longer, pay more: Life cover for women to become costlier

New data show gap between life expectancy of men and women has narrowed.

Women may have to pay a higher premium for life insurance, according to the new mortality table placed with the insurance regulator. The table suggests the difference between life expectancy of men and women has narrowed. At present, life cover for women costs 15-30 per cent less than for men.

“The new table suggests the gap between the mortality rate for men and women has come down,” said R Kannan, member, actuary, Insurance Regulatory and Development Authority.

The 1994-96 table presently used by the industry does not reflect any price differential, but companies have incorporated the global experience over a period of time while pricing products. Accordingly, depending upon the product and their experience, insurers charge 15-30 per cent less premium from women. The difference varies from product to age and is not uniform across the industry.

“The earlier table of 1994-96 is based on unisex data. Companies have taken into account the global experience and adjusted the price accordingly. The new table will help insurance companies differentiate rates between men and women,” said Sunil Sharma, head, actuarial, ICICI Prudential Life Insurance.

The new table will predominantly be driven by the experience of Life Insurance Corporation, which has a market share of over 70 per cent and also a huge traditional portfolio. Private companies do not have experience for ages beyond a point. Term and savings-cum-life endowment plans are expected to see a reduction in premiums. But most insurance companies have already factored in an improvement in their mortality table.

Kannan added that in some cases the premium had fallen by 10-15 per cent in the revised table. The new table may not reflect the movement in mortality rates. “The insurance portion in most products is very low. Ulips (unit-linked insurance products) had dominated the space for a long time, which had very little insurance element.”

The new table has been prepared by the Mortality and Morbidity Investigating Centre, a part of the Institute of Actuaries of India. It has inculcated the claim experience of individual companies and will be based on the 2006-08 data. It has collected data and used various factors like sex, age and geography.