You may soon have to pay higher premium for your term insurance plan. Here's why

Insurance companies are looking to hike the rates of their term plans, according to a report in The Times of India.

Max Life Insurance, Tata AIA Life Insurance, India-First Life and Aegon Life are some of the companies that are reportedly looking to raise the rates.

The reason behind this move is due to many reinsurers increasing rates for underwriting portfolios of gthese pure-protection covers and higher-than-expected mortality claims.

Some reinsurers changed rates at the start of this fiscal year. While others, who may not have fully reflected the hike then, are seeking to change rates now. We believe the current increases are only a catch-up with market rates. In line with our reinsurance arrangements, we reflected the rates in the new product we launched in July 2020.” said Satyan Jambunathan, CFO, ICICI Prudential Life Insurance, told the publication.

Reeling under the impact of the coronavirus pandemic, insurers do not have the headroom to absorb higher costs.

Reinsurers price their rates based on life expectancy and not on a single-year experience. However, this time it has coincided with the pandemic.