After IRDA's (Insurance Regulatory and Development Authority) decision to reduce the capital that insurance companies need to sell term policies, life insurance has become 40% cheaper. The dramatic reduction in term-insurance rates will help people buy life insurance policies. Insurance companies such as Kotak Life and Aegon Religare announced term rates which according to them are lower than what they were providing earlier.

 

Gaurang Shah, MD of Kotak Life Insurance on the latest development in life insurance sector said that the revised solvency margin requirement introduced by IRDA in March has brought down capital requirement by almost two-thirds, which has helped bring down rates. TS Vijayan, chairman of LIC commented that LIC constantly reviewed its term rates to retain its competitive advantage, and improvement in mortality was always passed on in the form of lower term rates.

 

On the other hand, insurance experts opine that getting standard rates is not easy, and is very rare for a person to get standard rates above the age of 40 with a few private companies. Some of these companies have a very narrow range for various parameters defining good health, which include parameters such as weight, blood pressure and abdominal girth. LIC too looking into situation has promised to review its terms rates soon.