Exclusive: Life insurers plan 5-12% cut in term premiums as competition heats up
Term Insurance buyers could see lower premiums as insurers look to sharpen pricing and gain market share. The planned cuts signal rising competition in India’s life insurance market.
Term Insurance buyers could see lower premiums as insurers look to sharpen pricing and gain market share. The planned cuts signal rising competition in India's life insurance market.
New Delhi: Four life insurance companies are independently planning to reduce term insurance premiums by 5-12% across select products and customer categories as competition intensifies in the segment, according to people familiar with the development.
Axis Max Life, HDFC Life, Bajaj Life and ICICI Life are among the insurers planning to revise their premium rates, with the extent of reductions varying across companies and products, the people said.
The proposed changes will involve actual revisions to premium rates rather than temporary promotional discounts and are expected to apply to policies sold through both online and offline distribution channels. Some insurers are considering product-specific revisions, including changes for particular age groups, one of the industry source said, requesting anonymity as the discussions are not public.
Queries sent to the insurers seeking comments on the proposed premium revisions did not elicit any response.
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The move comes after a strong expansion in life insurance business following the government’s decision to exempt individual life insurance premiums from the 18% goods and services tax (GST) in September 2025. The exemption lowered the effective cost of individual life insurance policies for customers and supported demand.
Rising yields on long-term government securities could also influence insurers’ pricing assumptions. The yield on India’s 30-year government bond stood at around 7.75% on November 9, 2026, about 51 basis points higher than a year earlier.
Interest rates are among the external variables considered in life insurance product pricing, alongside mortality experience and policyholder behaviour. The International Monetary Fund, in its 2025 assessment of India’s financial system, also noted that life insurers factor changes in bond yields into product pricing and the valuation of policyholder liabilities.
However, higher yields do not automatically translate into lower term insurance premiums. Their impact depends on how insurers’ investment and liability assumptions change, while mortality estimates, underwriting costs, distribution expenses and reinsurance rates also influence pricing.
The life insurance industry recorded a 15.7% increase in new business premiums to Rs 4.59 lakh crore in FY26, compared with Rs 3.97 lakh crore in the previous fiscal. However, the number of policies sold grew by a more modest 4.7% to 2.83 crore. Individual premiums grew 10.8%, while group business premiums rose 19.24% during the year.
For the six months ended September 2026, new business premiums of all life insurers stood at Rs 2,45,603.73 crore, up 20.59% from Rs 2,03,668.19 crore in the corresponding period of the previous fiscal.
The latest half-year comparison also comes against a base in which the 18% GST on individual life insurance policies applied for most of the corresponding period last year, before the exemption took effect on September 22, 2025.
