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POSTED BY ON May 11, 2012 3:31 pm COMMENTS (3)
I am planning to buy a term plan for a cover of approx. 70 lacs for myself.I am 31 yrs old and the premium calculated is in the range of Rs 10,800 to 13,000 for Aegon Religare and other private companies that includes accidental rider.
I compared this premium amount with Lics Amulya Jeevan term plan and it turns out that I have to pay aprox. 28k premium for the same sum assured for the LIC plan.
Why there is such a vast difference in the premiuim amounts of LIC and other private companies?
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Dear Prab, the difference lies due to the different mortality tables used by LIC & other Insurers. Almost all insurers are now using 2008 on wards mort tables, where as LIC’s Term products are still based on 1999 mort. tables.
Thanks
Ashal
The Reason is that the LIC has highest Claims Settlement Ratio. And everyone wants that their family members shouldn’t be troubled for money after they are gone ie why its safe to take term insurance either from LIC, ICICI prudential or HDFC life.. feel free to ignore the rest or else there would be no peace of mind..
Regards,
Nitin Verma
Hi,
I am also very much interested to know the reason behind this price different. I have always found that LIC’s products are not price competitive when compared with other products in the market. Probably LIC thinks that the people would any way buy its insurance products because of its credibility. And when it comes to buying insurance products, you would not want that the company which is selling you insurance would go bust !
Private companies want to grab a market share, lion share of it is currently owned by LIC. In order to get their feet into the Insurance market, Pvt companies are pricing their products lower than LIC’s product !
Another reason behind lower premiums offered by Pvt companies can be due to better risk management models and practises. I might be grossly understating LIC’s models, but it may be very likely that LIC would be sitting on outdated models or rather less complicated models which are churning out higher risks when assessing a person and hence demanding higher premiums to insure people. End of the day, they all need to risk assess a human being to get an idea of risk in order to quote a premium.
Regards
BanyanFA