Term Insurance, which is a pure protection plan without any savings component, might witness a further fall in premium rates in the coming months. While rates have fallen more than 50% in the last few years, these premium rates will be revised downwards soon. This is because IRDA is about to approve the new mortality rate tables based on the experience of the different life insurance companies between 2008-2010. The earlier rates used the LIC mortality table of 1994-96. Since then, the life expectancy has gone up leading to a drop in mortality rates. The private insurance companies, which were not in existence during 1994-96, started using LIC mortality tables as the base but with time started using their own mortality experience. Thus there was some revision in mortality rates, but with the new tables being formally accepted, we may see a further fall.
The new mortality tables that are about to be adopted breaks the data up in terms of location, smoker vs non smoker, gender etc. This will allow the life insurance companies to fine tune their pricing approach, applying different rates depending on location,sex etc instead of a blunt, flat pricing leading to subsidisation of one segment by the other. Intense competition among the 22 life insurance companies will also ensure that the full benefits of the reduced rates will be passed on to the consumers.