The insurance industry has been heavily impacted by the pandemic, and we can see its influences in new trends that have helped the industry adapt to the new normal. More people are buying life insurance and term insurance plans as a way of safeguarding themselves against risk, uncertainty, and financial crisis. With the change in the insurance sector, here are key term insurance trends worth acknowledging-
Current insurance industry trends
● Integration of technology with products and services:
Online chatbots, integrations of AI and machine learning, and digital documentation are just a few ways in which the insurance industry has digitised itself. These changes are further boosted by people’s willingness to both browse and purchase term insurance online instead of in person. This was already being done earlier, but the pandemic sped up the process.
● Greater focus on customer-centric services:
The insurance industry has been placing a greater focus on keeping all its services as customer-oriented as possible. From call centres that are active 24/7 to full-time online chatbots and a faster claim-settlement process, the ease with which one can access an online term insurance plan has become even smoother. The key has been in attempting to reduce the duress which customers might feel at any stage of the insurance buying, maintaining, or renewing process.
● Adaptations in the business model:
With increasing numbers of aggregators, the insurance industry is also revamping its business model. These aggregators are instrumental in helping consumers understand and compare policies before buying it. Insurance providers may be supportive in aiding customers to understand differences among their policies, but aggregator websites offer a relatively more unbiased and comprehensive comparison.
● Improved variety in insurance plans:
Although term insurance plans are straightforward enough to understand, today you can customise them to fit your needs. You can enhance your cover with added riders such as the accidental death and disability benefit, critical illness benefit, waiver of premium benefit, among others, by paying additional nominal premium. You can also purchase a different type of term insurance altogether like increasing term plans and return of premium term plans. You also have an option of selecting your premium payment term, the payment mode you prefer, and the way in which the death benefit will be paid out.
Challenges faced by the insurance industry
The aforementioned trends has seen an increase as a result of the pandemic. One of the main struggles has been working within a slow economy. Most people have lost their jobs or experienced salary cuts as a result of the pandemic.
However, the online process of browsing, comparing, understanding, buying, and renewing life insurance policies is a steadfast solution which ensures that a considerable number of people have access to availing of insurance coverage.
The future of Insurance
With this backdrop, what does the future of term insurance look like? As per reports, the life insurance industry is expected to boom between 2019 and 2023 at a CAGR of 5.3%. Although overall insurance penetration in FY20 was 3.76%, life insurance’s penetration alone accounted for 2.82%. What’s more, the Union Budget 2021 put out a slew of government initiatives that can boost the performance of the insurance industry.
This growth of the insurance sector can be attributed to the increasing financial literacy within the young population with an insurable potential, and the rising middle class. The FDI (Foreign Direct Investment) has also observed an increase in its limit from 49% to 74% as a result of Parliament passing the Insurance Amendment Bill.
Although term insurance plans have adapted to the changing consumer needs in the last few years, their main function is serving as a financial cover for your loved ones in case of your untimely death. While buying term insurance, it is advisable to account for your financial status currently, the financial needs of your family, and how sustainable it is to add the term policy to your portfolio.