Some major changes are going to happen in life insurance industry from October 1, 2013, especially in traditional policies such as Endowment Plans, money-back plans and even ULIP’s.
You will surely have a Life Insurance Corporation of India (LIC of India) policy or / any other private sector traditional plans or / might buy them in coming times.
There is a great possibility that the premiums on LIC policies will come down by some margin, because the mortality rates will now be revised by LIC in calculating the premiums.
Mortality rates are the rates at which the insurance company deducts the fees for insuring you based on policyholders age.
LIC had been using old mortality rates till now, but now they will have to use new mortality rates.
Just to give you an idea on reduction of premium, when check the mortality rate for a 40 years old person in old table, its 0.001803 . But in new rates its 0.002053 . Which is about 10 % better. Lets not go into detailed calculation at the moment, but risk premium part should go down by 10 %. Not the full premium, because only some part of whole premium in traditional policies are risk premium and rest is investment part .
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