In the wake of the COVID-19 pandemic, the life insurance sector in India has witnessed a structural shift in risk assessment and pricing. With mortality claims continuing to remain elevated well beyond the pandemic peak, a growing concern is whether term insurance premiums are likely to increase as insurers grapple with sustained risk exposure.

term insuranceThis article explores the impact of rising post-pandemic mortality on life insurance pricing, why may become more expensive, and how these changes could influence both saving plans and protection products in the future.

Understanding the post-pandemic mortality trend

Between FY20 and FY25, mortality claims filed by top life insurers such as HDFC Life, ICICI Prudential Life, and SBI Life increased by nearly 75 percent, reaching 1.085 million claims in FY25 compared to 623,000 in FY20. Notably, the mortality rate in FY24 and FY25 for these insurers surpassed even the levels recorded during the peak of the pandemic.

While the spike in FY21 and FY22 was largely attributed to the Delta variant wave, what is more concerning is the persistent elevation in claims even years later, suggesting long-term health impacts or delayed medical care during pandemic years are now leading to increased fatalities.

How mortality risk affects term insurance pricing

Term insurance is a pure risk product. Its pricing is primarily determined by mortality assumptions—how likely a person is to pass away during the policy term. When death claims rise unexpectedly and remain elevated, insurers are forced to re-evaluate these assumptions.

Traditionally, actuarial models used to calculate premiums rely on the idea that mortality rates change slowly and predictably. The pandemic disrupted this framework. With high and prolonged mortality risk, the cost of offering coverage has risen, and premium hikes are now becoming increasingly common.

Impact on pricing models:

Increased death claims lead to higher underwriting costs

Reduced number of lives insured in group term life insurance shifts focus to high-risk individuals

Concentrated risk pool means more payouts per policy issued

More stringent medical checks and policy filtering mechanisms

Why insurers are revising premiums

Life insurers are recalibrating their pricing to reflect these risks. Many have already increased premiums or are in the process of revising term life rates. Among the top changes observed:

Premium rates for new term insurance plans have been revised upwards by 15–30% for certain age and health profiles

Policyholders in higher age brackets or with co-morbidities are subject to tighter underwriting

New proposals may come with higher medical scrutiny and exclusions

Some insurers have even started discontinuing group term life schemes to manage portfolio risk, resulting in a 25% decline in coverage across the group insurance segment.

Will retail policyholders bear the cost?

saving plansYes, to a large extent. With fewer group schemes and persistent claim pressure, insurers are now focused more on retail term life plans and investment-linked like ULIPs. This shift is partly strategic—ULIPs offer a blend of protection and investment, allowing insurers to offset the risk-heavy term portfolio with higher-margin products.

However, for individuals looking to purchase or renew pure term insurance, especially those in their 40s and 50s or with health issues, premiums are likely to continue rising. New customers may find it more expensive or harder to qualify without extensive health documentation.

What about existing policyholders?

If you already own a term insurance policy, your premiums are locked in for the term. Rising mortality risk does not affect existing policies.
The increase applies only to new applicants or those seeking to enhance their cover.
Renewals or conversions may come with higher costs or additional health checks.

This makes early purchase ofterm insurance even more critical, especially for younger individuals in good health.

Alternate strategies amid rising premiums

As term insurance costs rise, some individuals may start exploring alternative plans that offer both savings and protection. Here are a few options:

1. Return of premium plans

These life insurance plans provide a death cover along with a refund of all base premiums if the policyholder survives the term. Though more expensive than standard term plans, they offer a savings element for risk-averse investors.

2. Unit Linked Insurance Plans (ULIPs)

ULIPs combine life cover with market-linked investment. While not a substitute for pure term cover, ULIPs can serve dual purposes—saving plans and wealth creation—especially appealing to those with medium- to long-term goals.

3. Short-term renewable term plans

For freelancers or those with temporary income concerns, short-term renewable plans can provide interim protection until financial stability allows for long-term planning.

How to manage costs and maintain cover

To mitigate the impact of rising premiums, consider the following:

Buy early: Secure a term plan in your 20s or 30s to lock in lower premiums for decades

Choose the right sum assured: Use a term insurance calculator to avoid over- or under-insurance

Compare plans: Different insurers adjust premiums differently—compare before buying

Explore combo plans: Some insurers offer saving plans bundled with term cover or riders

Maintain health records: Good medical history and regular check-ups improve your eligibility

Final thoughts

Yes, term insurance premiums are rising in response to higher mortality risks post pandemic, especially as insurers deal with unexpectedly elevated claim volumes. For new buyers, this means stricter underwriting and potentially higher costs. However, the value of having life cover—particularly amid ongoing health uncertainties—remains as relevant as ever.

The shift towards more retail-oriented, blended products like ULIPs shows how insurers are responding to structural changes. But for individuals seeking pure protection, buying term insurance early and maintaining good health continues to be the most cost-effective approach.

As premiums evolve, understanding your options and acting promptly is key to securing your family’s financial future in a changing risk environment.

Will Term Insurance Premium Increase Due To Rising Mortality Risk Post Pandemic?

The pandemic disrupted this framework. With high and prolonged mortality risk, the cost of offering coverage has risen, and premium hikes are now becoming incre