Good Analysis...
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. Pvt Cos how 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 rate us higher than Pvt Cos in view of Mortality rate in India and Why LIC is BEST? Friends !..Gold is never cheap n Cheap things are never Gold.
Above msg is posted by our Dharwad sdm, good analysis
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