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Insurer offers premium on fairer sex

BS Banking Bureau in Mumbai

OM Kotak Mahindra Life Insurance Company has mopped up Rs 60 crore (Rs 600 million) in sum assured in 20 days since the launch of the Kotak Preferred Term Plan.

The first pure risk plan of its kind solely targeted at women and non-smoking males, KPTP has attracted a sizeable number of proposals from the fairer sex.

The key attractions have been the cost of the plan and the longest available term period of 30 years.

The KPTP offers the lowest premium coverage in the industry to those who meet the "preferred criteria" of non-smokers among males over 25 years or any female - smoker or non-smoker - over 25.

In India though women are increasingly playing a major role - financially supporting families and in some cases even being the sole bread-winner - the percentage of women taking out insurance cover is just about one-third of the number of males buying risk coverage.

In developed nations this ratio is 40:60 between females and males. OM Kotak through its preferred term plan is trying to change the ratio in India.

A 30-year old female or a non-smoking male, under this preferred plan, would shell out just Rs 2,500 annually for a Rs 10-lakh (Rs 1 million) cover for a term period of 20 years.

A similar pure risk product of Life Insurance Corporation of India - Jeevan Anmol - would cost the individual Rs 2,813.

The second-lowest cover is offered by ICICI Prudential Life Insurance - Life Guard - at Rs 2,680, and Rs 2,484 for a female. HDFC Standard Life's term assurance costs Rs 2,920 and about Rs 2,800 for a female.

Birla Sunlife Flexi offers a term cover at Rs 3,710 for a 30-year old male and Rs 3,600 for a female.

OM Kotak Mahindra's own normal term plan would cost the individual Rs 3,700 for a similar coverage. "The preferred term plan is 32 per cent cheaper than our normal term cover where we have not segmented the market," said OM Kotak Mahindra Life CEO Shivaji Dam.

Most life insurance companies offer better rates to women. HDFC Standard Life on its term plan considers a female's age to be three years less than her male counterpart when calculating the premium.

This translates into a savings between two to 16 per cent. Similarly, ICICI Prudential Life reduces the age of a female buying a cover by two years in calculating the premium.

"This works out to a saving of at least four to five per cent depending upon the age," said ICICI Prudential marketing chief Saugato Gupta. While SBI Life does not have a pure term plan, it also offers a rebate of about five per cent on its endowment product.

The reason behind being able to offer a cheaper coverage is because studies have established that mortality rate of female is 40 to 50 per cent lower than males. Further, most companies assume that the fairer lot is mostly a non-smoker. Smokers face higher mortality than non-smokers.

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