Current Trends in Term Plans You Must Know
The insurance industry in India has been developing rapidly over the years, more so in the recent past due to the pandemic. People are increasingly purchasing term insurance as it is seen as the ultimate protection against all the uncertain risks and expenses that diseases or unfortunate death can cause. Moreover, even though the primary purpose of a term policy is to provide financial protection to one’s family in times of need, it is also a useful tax-saving* tool and hence, a part of many investment portfolios.
One of the major insurance industry trends is the rising popularity of the term plan as the most affordable life cover protection for one’s family. With the expansion of the insurance industry, here are a few more term insurance industry trends worth taking note of:
Four current insurance industry trends to know about:
Integrating technology with term insurance products & services
Not only is term insurance in India increasingly available online but so are the additional term plan #riders and how they can be included in a policy to enhance the plan. Combining technology with insurance products and services in the form of online tutorials, online term insurance calculators and premium payments has made the entire term insurance buying process easier and more transparent.
The digital trends in the insurance industry are further boosted by people’s willingness to explore online insurance products instead of undergoing the hassle of visiting offline branches and going through copious amounts of paperwork. Hence, people can simply browse term plans on their phones, laptops or tablets in the comfort of their homes, while travelling or even during office lunch breaks!
Greater focus on customer-centric services
Another recent trend in the insurance industry is the push for more ways to make all services more consumer-friendly. This includes but is not limited to 24/7 call centre services, full-time online chatbots, ease of access with regard to online term insurance brochures and time-saving term insurance purchase, insurance renewal and claim settlement processes.
While the purchase and renewal of term insurance policies online is a quick, easy and hassle-free process, insurance providers are also making efforts to reduce the time for settling claim processes to ensure that the aggrieved beneficiaries do not undergo any financial duress. When purchasing or renewing a TATA AIA term plan online, the Tata AIA term plan premium payments are simple and swift so that one can immediately avail of life insurance coverage without any delay!
Changes in insurance business models
The business models in the insurance industry are also undergoing major changes such as the increasing credibility of third-party aggregators. While these aggregators may not sell insurance products, they are instrumental for helping consumers understand, compare and verify insurance term insurance plans before purchase.
As simple as a term insurance policy may be, they are quite flexible and are offered in various types such as the return of premium term plans, convertible term plans, group term plans and so on. While insurance providers are quite supportive in helping consumers understand the differences in these plans, aggregator websites provide a more unbiased, neutral but comprehensive comparison of these products. Term life insurance comparison is an important step that customers should follow before finalising a plan and aggregator websites provide all the material needed to simplify the decision-making process.
Variety in life insurance products
Even though term insurance products are quite basic and simple to understand, they are not just limited to a single offering. Not only can you enhance term insurance plans with #riders such as the critical illness benefit, accidental death and disability benefit and waiver of premium benefit, but also avail of different types of term insurance such as convertible term plans, increasing term plans, return of premium term plans and more.
Even within a single term plan, you can choose the premium payment term, the mode of premium payment and the mode of death benefit payout. The choice of the death benefit payout in term plans is always flexible as these plans are designed to meet the financial needs of the late policyholder’s family in the best way possible.
What are the major challenges faced by the insurance industry?
The ongoing pandemic itself has brought in a host of challenges for the insurance industry, a slow economy being one of them. However, the online process of understanding, purchasing and renewing life insurance policies is a steady solution to ensure that a large number of people can still avail of insurance coverage.
As far as insurance coverage is concerned, most people purchase life insurance policies only for the purpose of saving taxes and not because of the life insurance coverage. As a result of this, policy buyers are less aware of how term life insurance policies should be compared and selected based on one’s individual needs, budget and the future financial requirements of their family. This, in turn, leads to inadequate insurance coverage which shakes one’s trust in the efficacy of term insurance plans.
Where is the insurance industry headed in the future?
According to reports, between 2019 and 2023, the life insurance industry is expected to increase at a CAGR of 5.3%. While the insurance penetration in FY20 was 3.76%, life insurance penetration stood at 2.82%.
The Union Budget 2021 came with a number of government initiatives that will help boost the insurance industry. With the increase in the FDI (Foreign Direct Investment) limit from 49% to 74%, the Insurance Regulatory and Development Authority of India has directed insurance firms to issue digital insurance policies.
The growth of the Indian insurance industry can be attributed to factors such as the young population with an insurable potential, the growing middle class, and growing awareness for insurance protection and retirement planning.
Tax-saving* is only one of the few benefits that a term policy offers but it mainly functions as a safe financial cover for one’s family. When one buys a term insurance plan, it is necessary to factor in the financial needs of one’s family, one’s own financial status as well as the affordability and suitability of the term plan.
As the life insurance industry in India is expected to grow by 14-15% annually in the coming three to five years, newer trends in terms of technology and consumer engagement could propel the growth of the sector.