Life insurance premiums likely to rise this year. Here’s why

Life insurance premiums are likely to increase this year, according to Policybazaar - an insurance web aggregator. A recently conducted exercise by a reinsurer suggests that reinsurance premium rates for individual term insurance business will rise, the report added. Reinsurers are the end risk owners of a term insurance contract. They determine the price along with the insurance company which is finally passed on to the customer.

Term Insurance prices work on a key assumption that rate of mortality of the pool of customers which can be enrolled under the current term insurance plans will be approximately 1/4th or 25 percent of the death experienced for average Indian population.

"If we go one level deeper, the online prices which are further cheaper are built of the assumption that 1/5th or 20 percent approximately is the mortality rate of the average Indian customer. This is because online caters to a more affluent segment of customers and hence better life expectancy," the report said.