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Whether you are single or someone with a family, an insurance policy can always be helpful. When you have a family to take care of, a term life insurance policy can appear to be even more important as even if you pass away, your family will not have to go through a rough financial patch. Nevertheless, with COVID-19 affecting many industries and the lives of people, even the insurance industry had to face certain challenges. So, in this piece of writing, let us today discuss the concept of life insurance and the COVID-19 pandemic opportunities and challenges related to the industry.
Life insurance is basically a contract between the policyholders and the insurance companies. As a policyholder buys a life insurance policy, he/she has to pay premiums regularly and as the policy matures, they will get maturity benefits. In case the policyholder passes away, the death benefit is provided to the beneficiary/nominee of the policy. A policyholder can also opt for various riders which will boost their policy benefits.
Although there had been a surge in buying life insurance policies, especially term insurance policies during the COVID-19 pandemic in India, the insurance industry also had to come across certain challenges. Many policyholders lost their jobs and went through major losses in their businesses. This led to them being not able to pay the premiums for their insurance policies. During this time, the industry went ahead to help its policyholders. Let us see how.
The insurance companies had to abide by all the directions provided by the IRDAI but they had to face a lot of challenges. They had to be available for chat support as well as telephonic calls 24X7. Also, providing a grace period to each policyholder impacted the growth of the insurance companies. Many insurance companies reportedly have undergone losses. Several policyholders also withdrew their policies for meeting their short-term needs.
Know More: Steps Involved in Making a Death Claim On a Life Insurance Policy
Policy buyers who are trying to purchase fresh insurance policies are finding it a bit challenging as they have to provide information about their COVID history. This helps the insurer to calculate the premiums based on their COVID history.
In any case, a new applicant now has to pay higher premiums. The premiums for life insurance policies are calculated based on the medical history of the policy buyers. Since the claim numbers escalated during COVID-19, it led to an increase in premium prices.
In many cases, the life insurance companies are even rejecting applications if they do not find the health condition of the policy buyers favorable.
Fresh applicants who have a history of being infected by coronavirus may face higher challenges as compared to applicants who were not infected. They will not only be required to pay additional premiums but also have to face a longer waiting period. To reduce life risk, the waiting period initiates from the date of COVID negative test result.
While providing the COVID-19 medical reports, the applicants would be required to submit additional medical reports of various diseases and health conditions such as lung diseases, diabetes, lifestyle diseases, etc. This is to check if the applicants developed these health conditions as side effects of COVID-19 and the related medications. Based on the medical reports, the applications are rejected and the premium prices are decided.
Read More: How To Defend Yourself Against COVID-19 Variants
Conclusion
If you are interested in buying a life insurance policy, it is better to purchase it in your early 20s. This is the time of life when you are less likely to develop health issues; hence, the premium prices charged to you will be lesser.
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During the COVID-19 pandemic, many people lost their jobs. This led to many policyholders not paying premiums on time, while some of them surrendered their policies as well. New applicants were fewer. As a result, the insurance industry could not make a lot of profit.
The life insurance companies offered a grace period of 30 days to the policyholders for renewal premium payment.
Life insurance helps protect your family’s future in event of sudden death. If the policyholder survives the term of the life insurance policy, he/she may also receive a certain maturity amount that can give him the added benefit of saving towards a life goal. Apart from this, the life insurance policy premium amount also helps the policyholder minimize their tax liabilities as they are exempted from the income tax.
This is a program in the Department of Treasury. As per the program, the casualty and property insurers who run at losses due to coverage related to pandemics are provided compensation.
PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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