In a sign of the growing popularity of life insurance in India, private life insurance companies saw a surge in premiums in March, with a 35% increase compared to the previous year. The total premium collected by private life insurance companies in March was ₹23,365 crore.
This surge in premiums comes at a time when the COVID-19 pandemic has brought to light the importance of life insurance, with many people seeking to ensure the financial security of their loved ones in the event of their untimely demise.
The increase in premiums was largely driven by a rise in sales of term insurance policies, which offer pure life cover without any investment component. Term insurance policies have become increasingly popular in recent years due to their affordability and simplicity.
Many private life insurance companies have also introduced COVID-19 specific insurance policies, which provide coverage for hospitalization expenses related to the disease. These policies have also contributed to the increase in premiums in March.
In addition to term insurance and COVID-19 specific policies, private life insurance companies have also seen a rise in sales of other types of life insurance products, such as unit-linked insurance plans (ULIPs) and endowment plans. These products offer a combination of life insurance and investment, and have traditionally been popular among investors looking to achieve long-term financial goals.
The surge in premiums in March is a positive sign for the life insurance industry in India, which has been growing at a healthy rate in recent years. According to a report by the Insurance Regulatory and Development Authority of India (IRDAI), the life insurance industry in India grew at a rate of 11.6% in 2020-21, with private life insurers accounting for a significant portion of this growth.
The increasing popularity of life insurance in India is also reflected in the rising number of policies sold by private life insurance companies. In March, private life insurance companies sold a total of 1.49 crore policies, a 27% increase compared to the previous year.
While the surge in premiums and policy sales is certainly a positive sign for the life insurance industry, there are also challenges that need to be addressed. One of the main challenges is the issue of underinsurance, where many people are not adequately covered by life insurance policies.
According to a recent survey by Max Life Insurance, a significant portion of the Indian population is underinsured, with many people either not having life insurance or being underinsured compared to their financial needs. This underscores the need for greater awareness and education about the importance of life insurance, and the need for people to assess their insurance needs and purchase policies accordingly.
Another challenge facing the life insurance industry is the issue of mis-selling, where agents or brokers sell policies that are not suitable for the customer’s needs or financial goals. To address this issue, the IRDAI has introduced a number of regulations aimed at ensuring that life insurance products are sold in a transparent and ethical manner.
Overall, the surge in premiums seen by private life insurance companies in March is a positive sign for the industry, and reflects the growing importance of life insurance in India. However, there is still much work to be done to ensure that more people are adequately covered by life insurance policies, and that policies are sold in a transparent and ethical manner.
