Sales of term insurance plans slow after lifting of lockdown

The sales of pure term insurance plans have started to slow after having picked up between March and June 2020. Despite this, sales of term plans continue to be higher than previous years due to growing awareness among buyers, according to industry executives.

Mr Prashant Tripathy, managing director and CEO of Max Life Insurance, speaking at Mint Money Conversation held last week, said, “The perception of risk was the highest during the lockdown. People didn’t know what COVID-19 was and how it could impact their families. We almost found people queuing up to buy a term plan."

“But when the government started lifting the lockdown from July onwards, the sales tapered off. It’s not at its peak, perhaps because the perception of risk has gone down a bit now. The sales of term plans are higher than in the past though not as high as what we saw from April to June," he added. Nevertheless, top executives of life insurance companies, said that their product mix would change slightly from hereon, according to a report by LiveMint. Term plans will have a larger share than they did in previous years even though savings products would continue to dominate sales.

Mr P Muraleedharan, executive director of LIC, said, “We have seen a shift in the attitude of customers. Our term insurance portfolio has almost doubled over the last year." According to him, consumers are not only opting for a term plan but also choosing higher sums assured than they did before.

SBI Life Insurance saw a similar trend. One of the life insurer’s online products sold through State Bank of India’s Yono platform covered 400,000 lives from April to September. “It was more than double of what we did the whole of last year," said Mr Mahesh Kumar Sharma, managing director and CEO of SBI Life.

He said, “There is definitely going to be more tapering off once the vaccine is found or once there is a reduction in the number of cases. What will stay is that people will be more aware of the products that are available. They will also be aware of the danger of not having a cover. “Some people may postpone the decision after this thing is through. But the demand will still be higher than the pre-COVID-19 levels.”A

Source: Asia Insurance Review