Since premiums are projected to keep rising due to macro and underwriting pressures, earlier purchase means securing lower rates that won’t increase with age or market conditions
Term insurance premium rates in India are rising. A variety of considerations, including real-world mortality rates related to Covid‑19, hardened global reinsurance rates, and domestic insurers pricing premiums closer to realistic mortality rates, have led to this increase.
“The PolicyX Q1 2025 Term Insurance Price Index shows a 3.36 per cent quarter-on-quarter (q-o-q) hike, part of a multi-year 5-12 per cent annual increase trend. Indian premiums are now catching up to their global counterparts, driven by macroeconomic stability, regulatory shifts, and rising risk awareness. From my lens, this trend is likely to persist in the near term as insurers recalibrate risk models and reinsurance costs remain high,” says Gaurav Goel, entrepreneur and a Securities and Exchange Board of India-registered Investment advisor (Sebi RIA).
Adds Kunal Varma, founder and CEO, Freo: “We do not expect greater price increases every year, but rather see somewhat of a gradual move up as risk and costs evolve.”
Should You Lock In A Policy Now
Locking in a term plan today is financially prudent. Term policies generally offer level premiums, meaning that once you purchase your plan, your premiums remain fixed throughout the term. Since premiums are projected to keep rising due to macro and underwriting pressures, earlier purchase means securing lower rates that won’t increase with age or market conditions.
“Waiting could mean higher premiums, not just because of price increases, but also from getting older or becoming unhealthy. You are not just locking in price, you are locking in peace of mind,” says Varma.
For instance, for a 25-year-old healthy male, a Rs 1 crore term insurance can cost between Rs 10,000 and Rs 13,000, while for a 46-year-old male it would be between Rs 28,000 and Rs 35,000.
“Term plans are important for everyone. The earlier you start, the better it is, as premiums are low. We strongly advocate term plans to be a part of your broad financial plan,” says Goel.
“Yes, it makes financial sense to lock in a term plan now – the earlier you enrol for a term plan, the lower the term plan premium will be, and the premium stays fixed for the entire term. As the term insurance premiums are on the rise, with every additional year of age, insurance premiums increase by 4-10 per cent. The older the applicant, the higher the risk in terms of insurance,” says Deepak Kumar Jain, founder and CEO of taxmanager.in, a tax advisory and e-filing portal platform of Rising Advisory Services.
The idea of a term insurance plan is that it should provide for your dependents in case of the unfortunate eventuality of your demise. Normally, the rule of thumb is 10 times your annual salary. However, to be more accurate, one can also use the income replacement method.