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Term Insurance Trends You Must Know

The increased acceptance of term insurance as the most cost-effective means of providing a family with life insurance is one of the major trends in the insurance industry. Here are a few more term insurance trends to watch out for as the insurance sector g

  • 5,015 Views | Updated on: Feb 27, 2024

    Key takeaways

    Know these four current trends in the insurance industry:

  • Integrating technology with term insurance products & services
  • Greater focus on customer-centric services
  • Changes in insurance business models
  • Variety in life insurance products

Life is uncertain and being financially prepared at all times is the best decision that you can take. This not only requires you to be very careful when planning the finances, but you also need to have the right balance and make informed decisions.

You need to remember that the financial decisions you make today will impact your future. You need to make smart investment decisions by keeping the financial goals and possible risks associated with the same.

The most important financial goal for you is your family’s well-being when you are around. There is no denying the fact that a term insurance plan is extremely important for the financial security of your loved ones. Such a plan will protect your family in case of an unfortunate event.

Traditional life insurance Vs term insurance

To choose the right type of insurance, it is important to understand the difference between traditional life insurance and term insurance. The biggest difference is the death benefit. In a term insurance plan, a death benefit will be provided at the time of the death of the insured if the policyholder dies during the policy tenure.

On the other hand, in the case of a traditional life insurance policy, the insured is provided with both the maturity benefit, as well as, the death benefit. However, the sum assured in the case of death benefit provided by a term plan is higher than that of maturity benefit, which is offered by a traditional life insurance policy.

Another difference lies in the process of surrendering a policy. It is easier to surrender a term insurance policy than a traditional life insurance policy. When it comes to a term plan, if you stop paying the premium amount, the policy will lapse.

However, in a traditional life insurance policy, the maturity benefit will be provided only when you complete the policy period. If you surrender the policy during the tenure, you will be unable to recover the entire saving part of the policy because only your premium amount will be paid back after specific deductions.

Current scenario of term insurance in the Indian market

The current scenario of the insurance sector has changed over the last few decades. With increased financial knowledge and the dissemination of the same amongst different classes of society, many people prefer to have a diversified portfolio. Individuals are not keen on putting all their money into one fund or in a certain type of investment.

This is why people prefer to have a balanced utilization of different schemes in their investment portfolios. This means that a term insurance plan forms a major part of the investment portfolio, but there are other factors which are also considered. In addition to a term insurance plan, investors are looking for riders to get additional coverage at a higher premium.

These riders come with a term insurance plan and provide comprehensive coverage to the insured.

Four Current Insurance Trends to Know About

Integrating technology with term insurance products & services

The availability of additional term plan riders and how they can be added to a policy to improve the plan is also rising online in India.

The entire term insurance purchase process has been simpler and more clear thanks to the integration of technology with insurance products and services in the form of online lessons, term insurance calculators, and premium payments.

People’s willingness to investigate online insurance goods rather than going through the effort of visiting offline branches and wading through mountains of paperwork is another factor boosting the digital trends in the insurance industry.

As a result, customers can easily peruse term plans on their phones, laptops, or tablets while at home, on the go, or even during lunch breaks at work!

Greater focus on customer-centric services

The drive to find more ways to make all services more user-friendly is a current trend in the insurance sector. This includes, but is not limited to, round-the-clock call centre services, live online chat bots, easy access to online term insurance brochures, and quick processes for buying term insurance, renewing insurance, and resolving claims.

While buying and renewing term insurance policies online is a quick, simple, and hassle-free process, insurance companies are also working to speed up the claim-processing time in order to protect financially disadvantaged beneficiaries.

Changes in insurance business models

A significant development in the insurance industry trends models is the growing legitimacy of third-party aggregators. Even though these aggregators do not directly offer insurance products, they are essential for assisting customers in understanding, evaluating, and verifying term insurance plans prior to purchase.

While insurance companies are quite helpful in explaining the differences between these plans to customers, aggregator websites offer a more objective, neutral, yet thorough analysis of these policies. Before finalising a plan, buyers should compare term life insurance, and aggregator websites offer all the information required to make the decision-making process as simple as possible.

Variety in life insurance products

Although term insurance policies are relatively basic and easy to comprehend, there are a variety of options available.

In addition to adding riders like the critical illness benefit, accidental death and disability benefit, and waiver of premium benefit to your term insurance plans, you can also choose from a variety of term insurance options like convertible term plans, increasing term plans, return of premium term plans, and more.

You can select the premium payment term, premium payment method, and death benefit payout method even within a single-term plan. Term insurance plans always offer a variety of death benefit payout options because they are made to best serve the needs of the decedent’s family financially.

Conclusion

With the advances in technology, it has become easier to look for different term plans and make a comparison amongst them. An increase in financial awareness has made life insurance an important part of financial planning. It is beneficial to own term insurance and life insurance at the same time. One will provide life protection, while the other will secure the financial future of your family.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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