Term insurance premiums keep going up. Here’s why, and what you can do about it

Every year around March, the same message circulates on WhatsApp groups and personal finance forums: “Term insurance premiums are going up in April. Buy now before the hike.”

The reality is more nuanced. Premiums don’t creep up gradually every year. They hold steady for a while, then jump when reinsurance contracts reset or mortality data gets updated. 2024 saw two rounds of hikes. 2025 saw none. If you’re shopping for term insurance right now, the question isn’t whether premiums will eventually go up again. They will. The question is when the next hike happens, and whether you want to be on the right side of it.

What’s happened since COVID

The pattern: extended flat periods followed by bursts of repricing. The COVID era set a permanently higher baseline. 2024 brought two distinct rounds. Then 2025 went quiet.

What drives the hikes

When premiums do move, four factors are usually at work.

Reinsurance costs

When you buy a ₹1 crore term plan, your insurer passes a chunk of that risk to a reinsurer (typically Munich Re or Swiss Re). The reinsurer charges for this, and that cost gets baked into your premium.

Reinsurance rates spiked during COVID. The life insurance industry paid out ₹16,921 crore in COVID death claims by May 2022 (BusinessToday). Those rates haven’t come back down. BusinessToday reported in August 2023 that global reinsurers remain cautious about the Indian market, with life insurers retaining higher risks themselves.

Long-term bond yields

Insurers invest your premiums in long-term government bonds. When bond yields are high, insurers earn more and can afford to charge less. When yields drop, premiums go up.

The yield on the government bond maturing in 2063 dropped 31 basis points in the year leading to mid-2024, from 7.39% to 7.086% (Business Standard, July 2024). As of March 2026, the 10-year yield sits at 6.82% (Trading Economics), still below 2022–23 peaks. For a product where nearly 50% of buyers choose policy terms over 40 years, these long-duration yield movements directly affect pricing.

Mortality data

The Institute of Actuaries of India (IAI) has a new Indian Mortality Table ready and waiting for IRDAI approval (Asia Insurance Post). Once approved, insurers will recalibrate pricing. Post-COVID life expectancy has actually improved, so the new table could push prices in either direction. But the recalibration itself will trigger industry-wide pricing reviews.

Underwriting standards

After COVID, insurers tightened who they’d cover. Some stopped issuing policies to non-graduates, raised minimum income requirements for ₹1 crore covers, and excluded certain pincodes (Business Standard, January 2022). These restrictions have partially relaxed, but the bar remains higher than 2019.

Why 2025 was flat (and why that might not last)

No major insurer announced premium hikes in 2025. The PolicyX Term Insurance Price Index ticked up just 2.45% in Q4 2025 compared to the previous quarter.

The most likely explanation is the GST cut. In September 2025, the government reduced GST on individual term insurance from 18% to 0%. That immediately lowered the total amount new buyers paid by up to 15%. For insurers, the GST cut gave them room to hold base rates steady while customers still felt they were getting a better deal.

But that cushion is a one-time event. The GST is already at 0%; it can’t drop further. Meanwhile, the structural pressures haven’t gone away:

• Reinsurance costs remain elevated above pre-COVID levels.
• Bond yields haven’t recovered to 2022–23 peaks.
• The IAI’s new mortality table is still pending IRDAI approval.

The history shows that premiums can hold flat for a year or two before jumping. 2022–23 was stable. Then FY24-25 brought two rounds of 4–10% hikes. 2025 has been flat. The conditions for another round are accumulating.

The double cost of waiting

If you don’t have term insurance yet, every year you delay costs you in two ways that compound on each other.

You’re a year older. Age is the single biggest factor in term insurance pricing. A PolicyX study cited by Cafemutual found that delaying by 10 years increases your premium by 49% if you’re 25, 76% if you’re 35, and 84% if you’re 45. That’s the age penalty alone, holding everything else constant.

The industry price level keeps rising on top of that. You don’t just pay the age penalty. You pay the age penalty at whatever the current industry rate happens to be. A 31-year-old buying in 2025 pays the 31-year-old rate at 2025 prices. Next year, a 32-year-old will pay the 32-year-old rate at 2026 prices. These two forces multiply.

What “locking in your premium” actually means

Most term plans in India use level premiums. You pay the same base amount every year for the entire policy term. If you’re 30 and you buy a 30-year plan at ₹10,000 per year, you pay ₹10,000 every year until you’re 60. Future hikes don’t affect you.

The base premium is genuinely locked. Insurers cannot revise it midway on an existing policy (PolicyX, Aditya Birla Life, Ditto Insurance all confirm this). The only exceptions are if you modify the policy yourself (adding riders, increasing sum assured) or revive a lapsed policy.

One thing that can change your total outgo is the tax component. GST changes apply to all policyholders. When GST dropped to 0% in September 2025, existing policyholders’ renewal bills got cheaper. If GST were ever raised again, renewal bills would go up. But the base premium itself stays fixed.

What should you do

If you don’t have term insurance yet: Premiums are significantly higher than pre-COVID levels, and the structural pressures for another round of hikes haven’t eased. The age penalty compounds on top of this. If you’ve been meaning to buy, the flat period is the best time to act, not after the next round of increases.

If you already have term insurance: Your base premium is locked. But check whether your cover is still adequate. If your income has grown or you’ve taken on a home loan since you bought your policy, you might need a top-up policy. That top-up will be priced at current rates.

If you’re comparing plans right now: Don’t rush into a bad policy just to beat a potential hike. Compare claim settlement ratios, check exclusions, read the fine print on riders. Choosing the wrong plan can cost your family lakhs when they actually need the money.

FAQs

Will my existing term insurance premium increase?
No. If you have a level-premium term plan (which most plans in India are), your base premium stays the same for the entire policy term. The only external factor that can change your total outgo is a change in GST rates, which currently stand at 0% for individual term plans.

How much have term insurance premiums increased since COVID?
IndiaFirst Life’s Deputy CEO told BusinessToday in March 2023 that pure protection premiums had risen 50–100% from pre-COVID lows. In 2024, major insurers raised rates another 4–10% across two rounds (Business Standard).

Why were there no hikes in 2025 if pressures are building?
The GST cut from 18% to 0% in September 2025 likely gave insurers room to hold base rates steady. But this was a one-time cut. The underlying pressures (reinsurance costs, bond yields, pending mortality table update) remain.

Does the GST cut to 0% mean term insurance is getting cheaper?
The GST cut reduced the total amount you pay by removing the 18% tax. But the underlying base premium set by insurers has risen significantly since COVID. The GST cut was a one-time benefit that partially offset years of base premium increases.

When will premiums go up again?
No one can predict the exact quarter. In 2024, two rounds of hikes came within months of each other. The conditions that cause hikes (reinsurance repricing, bond yield shifts, mortality table updates) are all still present. The only certainty is that once you buy, your rate is locked.

Sources: Business Standard (Jul 2024, Dec 2024, Jan 2022, Sep 2021), BusinessToday (May 2022, Mar 2023, Aug 2023), PolicyX Term Insurance Price Index, Cafemutual, Asia Insurance Post, Trading Economics, HDFC Life, Tata AIA, Aditya Birla Life, Ditto Insurance, ClearTax.