Life insurers adjust term premiums ahead of business end of financial year

While some companies are increasing rates, others are slashing them, and still others have made no change; GST changes on premium taxation may change outlook

Ahead of the business end of the financial year (FY25), a mixed trend is emerging in the life insurance sector, with some major players reducing premiums on their term products to drive sales, while others are increasing them to protect margins and remain competitive in the market, said industry insiders. 

HDFC Life Insurance – the second largest life insurer in the country – has increased their term life insurance premiums by about 5 per cent for Rs 50 lakhs and above, as per distributors. Term business accounts for almost 6 per cent of the insurer’s business as of the April-September period of FY25. 

However, term life insurance rates for the largest private sector life insurer – SBI Life Insurance - has been slashed by almost 8-10 per cent on a recently launched term product, said an insurance distributor. 

Meanwhile, state-owned Life Insurance Corporation (LIC) has launched a term insurance product targeting a younger demographic, with premiums approximately 6-7 per cent lower than those of its other term insurance offerings. 

Term life insurance provides pure life cover. It offers a fixed life cover to family members in case of death during the policy term.

“The new LIC Yuva Term Plan, designed for individuals under the age of 45, offers premiums that are comparatively lower than the insurer’s other plans. Term life insurance premiums are typically lower among private life insurers compared to LIC. However, the rates for this new policy are notably more affordable than those of LIC’s existing offerings,” said an insurance distributor. 

On the other hand, other major players such as ICICI Prudential Life Insurance and Tata AIA Life Insurance have not made any changes in their term life insurance premium rates yet. But there could be changes in the near term, said industry sources. 

“Tata AIA had made some revisions of around 3-7 per cent in their term life insurance rates in August. However, post that we have not seen any major changes in the term life insurance rates,” another insurance distributor said. 

GST rates could be another factor in rate-setting for insurance companies. “If the GST recommends a reduction in tax for term life insurance rates the rates are likely to move downwards. However, due to yield movements, the industry is likely to witness a minor 2-3 per cent uptick in term life insurance rates,” an insurance intermediary said.