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Those looking at the area need to take the various factors that will affect the situation.
Increasing life expectancy:
One of the main reasons why the individual is witnessing a fall in the premium rates is because of the fact that the life expectancy of Indians is going up. This has been seen in the figures released in the latest census and this is part of an overall trend that is taking place in the country.
This will get reflected in the workings of the insurance company and hence there will be an impact on the premium for the individual. The benefit will be visible when the insurance company changes the premium to be paid and this is actually on the lower side, which will mean a larger amount of cover for the same amount of premium for the individual.
Changing mode of calculations:
The other thing that is also being witnessed in the country is that various insurance companies are now establishing themselves in the market after operating for several years. One of the advantages of this is that the companies have a history of experience that they can use for the purpose of fixing the premium for the individuals. As the experience improves, it is but natural that this will get priced into the entire working with the end result that the premiums will start reflecting the real situation on the ground.
The other thing is that there are also various regulatory requirements like solvency margins and other factors that determine the position of the premium to be charged. If there is a reduction in some of the regulatory conditions then this can also lead to a situation where the premium will be reduced and the customer benefits. The moment this is reflected then the benefits will be visible for the individuals.
Only life cover:
When it comes to the question of a term policy there is a premium being paid only for the cover for the life of the individual. There is no other factor that is coming into the picture and due to this reason there is a situation where the individual finds that just the question about the life expectancy determines the premium that has to be paid in this particular case.
This is not the case when it comes to various other types of insurance policies because there are a lot of other factors that are in play. This results from the mixture of several factors that would go into the creation of the specific insurance policy and hence the final premium that is decided would be based on several factors. This is not the case in the term policy and here the change is reflected immediately.
Replanning:
The investor has to ensure that they are aware about the changes that are taking place around them. When it comes to the reduction of the insurance premium for term policies then there has been a sharp reduction in the term premium to the extent of nearly 40-50 per cent in the last several years.
This might require some effort on the part of the investor to replan and rework the entire situation to see how they can ensure that they have the required amount of insurance cover and at the same time make it cost effective in terms of the premium to be paid.
Source : www.mydigitalfc.com
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