OTHER GROUP COMPANIES
market

Term insurance plans have highest lapsation rate: Survey

A term insurance policy pays a benefit to the nominee only if the policyholder dies

July 10, 2013 1:35 IST | India Infoline News Service
Term insurance policies in India have the highest lapsation rate, according to a report titled, ‘Life insurance thematic: Let’s not give up on life yet’, from Espirito Santo Securities.

The lapse rate in terms of premium was 19% for term insurance policies, 11% for unit-linked insurance policies (Ulips), 6% for par-whole life, par-endowment, 4% for non-par endowment, and around 2% for pension plans, the report added.

A term insurance policy pays a benefit to the nominee only if the policyholder dies. In case the policyholder survives the tenure of the policy, nothing is paid to him or to the nominee.

The study said that there was a direct correlation between lapsation of insurance policies and the age of the policyholder. Young people (18-27 years of age) uncertain of their cash flows were seen lapsing their policies more than people between 43-57 years of age. Also, lapsation decreased as the size of the policy increased.

OPEN A DEMAT ACCOUNT & Get
FREE Benefits Worth 5,000

FEATURED ARTICLE

BLOGS

Open Demat Account
  • 0

    Per Order for ETF & Mutual Funds Brokerage

  • 20

    Per Order for Delivery, Intraday, F&O, Currency & Commodity