Private Life Insurance Cos. hiked Mortality charge

Dec 6th, 2010No Comments

The average life expectancy in India for males has increased from less than 60 years in the 1990s to over 67 years today, mainly due to medical advance. One would have expected that this would result in lower mortality charges in life insurance calculations. However, the reverse seems to be the reality.

Mortality charges of new ULIPs have gone up. Indian insurance companies use LIC INDIA’s mortality table (which was prepared 15 years ago) as a base and combine that with their own claims experience and expenses to price products. This is a subjective matter and hence the mortality charges of insurers vary, but there is no downward trend.

Insurers are becoming creative in finding ways to levy charges on customers. In some cases, the payment for accidental death benefit is more in new ULIPs and hence the mortality charge has been increased substantially because it is outside the cost cap of the Insurance Regulatory and Development Authority (IRDA).

Aviva and Metlife have also hiked mortality charges by about 10% and 20% respectively.

LIC INDIA, the most trusted insurer hasn’t increased the mortality charges.

Courtesy: Moneylife

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