Your insurance premium is likely to cost less from April 1

MUMBAI: Working-age Indians may have to pay less to buy life insurance in the next fiscal year, with the industry switching to the latest statistical tables on mortality to review the tariffs it charges for covering lives.

Those in the 22-50 year age group could see a reduction in term-cover premiums from April 1, when the reference would be reset.

“The premium depends on company-specific experience, and it may also come down. The mortality table reflects the industry experience,” said Sanjiv Pujari, chief actuary, SBI Life Insurance. “In some countries, it is an annual affair. But in India, it is carried out every five-six years.”


The revised Indian Assured Lives Mortality table 2012-14, published by the Institute of Actuaries of India, showed that mortality rates among the insured fell 4-16% for those aged between 22 and 50 years. Earlier, the industry was using the 2006-08 table as the reference frame for pricing life insurance products.

The mortality tables, which reflect deaths per thousand assured lives, would be used by life insurers for calculating reserves to be set aside for payouts to policyholders.

“These reductions in rates where most of our plans are sold may further help the industry in lowering product pricing, especially for term plans,” said Anil Kumar Singh, appointed actuary, Aditya Birla Sun Life Insurance.

Overall, the revised table is favourable as there is a reduction in mortality rates in buckets where the industry sells the majority of life policies.

Living Longer

	Avg Mortality Rates
Age bracket	2006-08	2012-14	% Change
22-25	0.97	0.93	-4%
26-30	1.03	0.95	-8%
31-35	1.2	1.10	-9%
36-40	1.62	1.47	-10%
41-45	2.51	2.17	-13%
46-50	4.26	3.59	-16%
51-55	6.97	6.21	-11%
56-60	10.38	9.67	-7%
61-65	15.21	13.86	-9%
66-70	22.96	20.44	-11%
71-75	35.16	31.95	-9%
76-81	56.27	54.33	-3%

Source: Institute of Actuaries of India, Aditya Birla Sun Life; Data for male assured lives

However, premiums may rise for older consumers. Tables show that mortality rates increased 3-21% in the 82-105-year age bracket.

“This may impact plans that have maturity ages beyond 80, although currently very few plans offer such coverage,” said Singh. Insurance companies factor in their own experience, in addition to the statistics shared by reinsurers, for mortality rate assumption and premium rate calculations.

“Internal experience analysis is carried out much more frequently, at least annually, than this industry level mortality study, which has been updated after six years,” said Sanket Kawatkar, partner, Milliman Advisors LLP. “However, just because the industry table changes, it does not necessarily mean that insurance companies would change their internal mortality assumptions,” he added.

The tables also show that mortality rates for women insurance buyers have reduced. There has been an improvement of 4.5-17% for women insurance buyers in the 14-44 year age group.