20% boost in ticket-size of life insurance policies

The average ticket-size in life insurance policies has jumped almost 20 per cent for individual policies in the last three years. Life insurance companies have seen the average ticket size rise to ~40,000.

With the sum assured in policies going up, the subsequent premiums for the products are also going up.

Deepak Mittal, managing director and chief executive officer, Edelweiss Tokio Life Insurance, said, the portfolio average premium for individual policies was around ~40,000 and the average ticket size was growing at a compounded annual growth rate of about 19 per cent for them.

The increase has occurred in both offline as well as online plans.

Mittal said for online products, one of the key reasons for increase in ticket size was increased need of higher protection. He added for offline products, an increased effort on need-based sales resulted in higher sum assured and higher ticket size.

In the past, there had been heavy discounting in the online insurance space leading to premiums dropping to about ~6,500-~7,000 on an annual basis.

Intense competition in the online term space,had seen prices take a slump, but they have since recovered.

Insurance com- pany executives said apart from the prod- uct premium, the features were also being looked by policyholders any purchase.

Karthik Raman, chief marketing officer and head, strategy and products, IDBI Federal Life Insurance, said their average ticket size was ~47,000 into before from new business premiums for individual business.

He said it had grown by a compounded rate of about 20 per cent in the past three years.

“With inflation, the amounts needed to meet important goals such as education or retirement had increased many folds. The increased tax savings limit to ~1,50,000 under Section 80 C combined with increasing incomes has aided in this increase,” said Raman. The type of products also plays a role in the average ticket size.

Srinivasan Parthasarathy, senior executive vice-president, chief and appointed actuary, HDFC Life, said for guaranteed savings products, the average ticket size was around ~63,000.

He added this was primarily because of long-term guarantees offered in the plan. “It comes as an attractive proposition to the customer given the downward trend in the longterm interest rate scenario.”

The unit-linked insurance product (Ulip) portfolio of companies generally had a higher ticket size since these were investment products and customers were not risk averse. The ticket sizes ranged from ~50,000-60,000 for these products.

Life insurers are now focused on need-based selling across all products.

Parthasarathy said the average ticket size had gone up with the adoption of needbased selling methodology.

“We have created various sales tools/calculators such as retirement planners, humanlife value, and child education planner, which help the customer better project their financial needs 10-15 years down the line, considering the impact of inflation and future interest rates,” he said.

Life insurers are now focused on need-based selling across all products