Term Insurance premium :
LIC v/s Pvt insurance Cos.
Example: 1Cr Term Insurance, premium LIC - 40,000/- Pvt Cos - 20000/-. Presuming 10,000 policies done by each. Amount collected by LIC 40 Cr and Pvt Cos 20 Cr.
Mortality rate in India per 1000 is 3 (same for both LIC and Pvt Cos).
Now as per this rate presuming 30 claims will arise out of 10000.
So claim amt. to be paid will be 30 Cr.
LIC will pay 30 Cr out of collection of 40 Cr less Administration cost.
How Pvt. Cos. can
pay 30 Cr from collection of 20 Cr less administration cost?
Hence they will have to reject 15 claims (50%) because at least 5 Cr will be their administration cost etc.
Now you understand why LIC's premium rates are higher than Pvt Cos in view of Mortality rate in India and Why LIC is the BEST?
*Friends !.. Gold is never cheap and Cheap things are never a Gold !*
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