Two wheeler insurance plans are offered for long-term duration of two or three years. The policyholders can buy such long-term plans by paying the lump sum premium at once. Till now, only two-wheeler plans, both third party liability and comprehensive plans, are being offered for longer durations. However, IRDAI has proposed long-term policies for third party car insurance plans as well. These long-term plans benefit the policyholders by removing the hassles of annual renewals. Besides this obvious benefit, there is a premium saving benefit too. Under long-term plans, the third party premium for the current year is fixed over the duration of the policy. Even if the IRDA revises the premium rates in the next years, the revision does not affect the premium rates of long-term plans already bought. Thus, if policyholders buy long-term two-wheeler plans, their third party premiums would remain fixed over the chosen policy tenure. Even if the IRDA increases the third party premiums in the next year, they would not have to pay the additional premium under their continuing plan. Aren’t long-term plans beneficial?
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