This post will help you to choose the best term plan in India for 2016. I will present you the all available online terms plan in India. Using most important parameters, I will shortlist the top term plan for you. You will also learn why online term insurance plan is a better choice.
Why Term Insurance Plan
You would agree that simple is beautiful. Purity is the most desirable attribute. The term insurance plan is a simple and pure insurance. A pure insurance policy covers your life so that you can live a relaxed life.
The insurance cover compensates the unpredictable financial loss. This unpredictable loss may happen to a home because of fire. It may happen with a car because of the theft. And it may happen to a family due to the death of the breadwinner. The insurance cover tries to fill the financial gap.
When an insurance cover compensates only the financial loss, it is pure insurance. When it covers the financial loss due to the death of insured, it is Pure life insurance. This pure life insurance is called as Term Insurance Plan.
The term insurance plan charges the premium, only to cover the loss of life. It does not take any money to invest on your behalf. It does not take extra money, hence, it does not give any maturity amount.
The term insurance plan does only those function, for which insurance is devised. No complication, No Mixture. Transparent and simple. Affordable and adequate.
Why Online Term Insurance
Thinking about the death is a taboo. Therefore, people don’t plan the life after the untimely death of a breadwinner. Thus, to make you aware about the insurance, an insurance agent is used. The insurance agent tells you about the benefits of insurance cover. He/she also helps in fixing the insurance cover amount (sum assured). This service of insurance agent come at a cost. The insurance company shares, some percentage of your premium with the insurance agent.
But, what if, you are already aware to the benefits of term insurance? What if, you yourself can decide the sum assured? It means you don’t need an insurance agent and you should pay less premium.
The online term plan has given you this facility. In this plan, insurance company spends very little in distribution and does not pay to the insurance agent. This saving reduces the insurance premium for you. The difference in premium is 25-60%.
So, the online term plan is a cheaper option to the educated class. I assume, that the reader of this post is educated enough to avail the facility of online term plan. In this plan, you have to fill the form and arrange all the documents. There would not be any agent to assist you.
Recommended: 5 Reasons, Why do You Need a Term Insurance Plan
Criteria To Choose Best Term Plan
While online term insurance plan gives you some benefits, it puts a greater challenge before you. You have to decide the insurance cover amount and choose the best online term plan. In this post, I would try to guide you through the selection of best term insurance plan in India for 2016.
To select the best term insurance plan, we need parameters to assess them. Let’s know, what makes a term plan the best.
Why do you prefer the branded item? Because you do not want to repent in future. Because, you want a product or service which is trustworthy and best in class. A brand earns its name after many years of consistency on quality.
The trust of a brand becomes more important when it is the matter of many years and it involves very big amount. The term insurance is taken for many years and sum insured goes in lakhs.
Therefore, the pedigree and standing of a company become most important while choosing a life insurance policy. You can aAsk to the people about their experience with the insurance company. What is the general perception of insurance company among your peers. Go through the consumer complaints forum. Learn about the group companies. Discover about the management and their practices in other businesses.
Claim Settlement Ratio
We take a term insurance plan to compensate the family member after the untimely demise of earning member. The predefined amount of compensation by the insurance company is termed as the sum assured. This sum assured is paid to the family, if someone dies prematurely. The payment of sum assured is called as the claim settlement. But, sometimes companies do not pay the claim citing concealment of facts or some other reason. Sometimes, this may be genuine while sometimes it may be an arbitrary step. Every one of us does not want to go to the company which rejects the claim on the false ground. The attitude of company towards claim settlement can be judged by going through the claim settlement ratio. The greater the ratio means more reliable insurance company.
However, After the new insurance bill, an insurance company can’t reject a claim on any ground after 3 years. So, this ratio is valid for 3 years. Who knows the timing of unfortunate event!
You can check the claim settlement ratio here.
This is the most overlooked factor during the selection of term insurance. But It is the most critical factor. Thanks to stringent regulation of IRDAI, the default by insurance company rarely comes in our mind. But, deterioration of financial condition does not take time. We have seen the fall of American insurance company AIA.
A catastrophe also tests the financial viability of an insurance company. What if, an insurance company finds itself unable to honor the mass claims. To avoid such situation IRDAI had prescribed a minimum solvency ratio. It means the insurance company should have the minimum amount with it to fulfill the claims. Therefore, better the solvency ratio means a more financially sound company is.
However, as the company grows, it becomes difficult to maintain high solvency ratio. The solvency ratio requires capital by the insurance company. You will find that biggest insurance company of India, the LIC has the lowest solvency ratio. It does not mean that you should be worried about the LIC as it is a separate case. The LIC is a government owned company and the government is bound to fulfill the obligations of LIC. You can find solvency ratio of a company in the annual report of IRDAI.
Thus, the financial stability of the insurance company is very important. The solvency ratio is the criteria to tell about the financial condition of the company.
You chose the online term insurance plan, only to save the premium amount. Yes! we deserve the best online term plan at the lowest cost. If an insurance company fulfills my criteria, then why should not I go for the cheapest one. The difference in premium amount is big. The costliest online term plan charges 200% premium of the cheapest.
Poor customer service can be a big irritant. There are many people who chuck an insurance company because of the poor customer service. The customer service becomes more important in the case of online term plan because you don’t have an agent to assist. The medical check up, delivery of policy document, change in nomination and address requires customer service. Hence, you should also consider this factor before finalizing the term insurance plan.
You can get an idea of customer service of insurance companies from consumer complaints forum.
Existing Online Term plans
Almost every life insurer has started to offer online term plan. Some are cheap and some are very costly. Some are available with riders while other are pure term plan. Some belong to reputed big insurance companies while other are from budding companies.
Online Term Plan
|2||AEGON Religare iTerm Life Insurance|
|3||Edelweiss Tokio My Life|
|4||Bharti Axa Life eprotect Plan|
|7||Max Life Online|
|8||Canara HSBC eSmart|
|9||IndiaFirst Anytime Plan|
|10||HDFC life Click2 Protect|
|11||ICICI Pru iProtect|
|12||SBI Life – eShield|
|13||Bajaj Allianz iSecure|
|14||LIC e Term|
Selection of Best Term Plan
Among 14 online term plans, selecting the best online term plan for 2016 is not the easy task. Till last year, claim settlement ratio played a big role to decide the best term insurance company, but after the new insurance bill, it has little significance. Now, the management and parent group are the basic criteria to choose the good online term plan. I have weeded out the novice and not so serious player of life insurance. The decision is subjective and I used my perception and knowledge to decide it. Of course, you can have a different take.
In the next step, I went through the claim settlement ratio. It has a little role after 3 years of policy, but initial 3 years are also very important.
Then I checked for the solvency ratio. In this criteria, LIC is at the bottom but this criteria is irrelevant for LIC as it is backed by the government.
The premium cost was the next factor. I have compared the term plan on the basis of premium as well.
I did not come to one are two insurance companies. Because, selecting one best company is not possible. A term plan may be cheap, but the company may not have that good reputation. While a reputed company can charge a high premium. Hence, I am giving 5 best online term plan. These are almost equal.
It is the online term plan by the biggest insurer of India, the Life Insurance corporation. Since LIC is the government owned company and guaranteed by the law, the LIC e-Term carries almost negligible default risk. Also, LIC is a conservative insurance company and takes care of its finances very well.
The claim settlement ratio of LIC is the best among all the life insurance companies. It has paid 98.14% claims. However, we should also keep in mind that most of the policies of LIC are endowment policies where maturity claims are guaranteed.
The solvency ratio of LIC is least. It just above the prescribed limit of 1.5%. LIC is just fulfilling the statutory limit. Indeed, the government backing makes it most reliable.
LIC e-Term charges the highest premium. Premium for 1 crore sum assured of 30-year male non-smoker is Rs 16,400. Some private life insurers charge half of its premium.
You can read the review of LIC e-Term to know more about it.
2. HDFC Life Click 2 Protect Plus
HDFC Click 2 Protect is the popular online term plan. HDFC life is one of the pioneers of online insurance policies. It had launched a similar online term plan HDFC lick 2 protect. Now this plan has been discontinued. HDFC Life is the oldest private life insurance company of India. It is working since last 15 years. The parent group HDFC is reputed private bank of India.
The claim settlement ratio of HDFC Life is quite good. In 2013-14, it has settled 94% claims.
The solvency ratio of HDFC Life is 1.94%. It is better than the LIC and Birla Sunlife, but way behind than ICICI Pru Life.
The premium of HDFC Life Click 2 Protect is far less than LIC e-Term. It is cheaper than 4 other term plans. It is 28% cheaper than LIC e-Term. You can get 1 crore sum assured for 30-year non-smoker male at the premium of about 12,000.
HDFC Life Click 2 Protect Plus gives accidental benefit and staggered payment option.
Learn more about HDFC Life Click 2 Protect plus.
ICICI Pru iProtect
This online term plan is from the kitty of ICICI Pru Life. The Parent company ICICI bank is the biggest private bank of India. ICICI Pru Life is also one the oldest private insurance company. It was established in 2000.
The solvency ratio of ICICI Pru Life very good, It is 3.72. It means that company is financially on a strong foot. You can be assured of your claim.
The claim settlement ratio is also same as the HDFC Life. It is 94.1%. The claim settlement ratio of ICICI Pru is behind the LIC. It shows that ICICI Pru is conducting its business professionally.
The Premium of ICICI Pru iProtect is a little bit higher than HDFC click 2 protect plus. But it is lesser than LIC e-Term, Bajaj iSecure and SBI e-Shield. The premium of ICICI Pru iProtect for 1 crore sum assured of 30-year non-smoker male is 12,481.
The ICICI Pru iProtect gives ‘accidental death benefit’ rider along with this cover.
SBI Life eShield
SBI Life eShield has the SBI letters in its name. SBI is the biggest bank of India. It has good brand appeal. Association with SBS makes SBI Life trustworthy.
The claim settlement ratio of the SBI Life is above 90% i. e. 91.1%. However, It is lesser than other four contenders.
The solvency ratio of SBI Life is better than LIC and HDFC Life but lesser than Max Life and ICICI Pru Life.
The premium of SBI Life eShield is less than LIC, but it is costlier than other three best online term plans. The premium of SBI Life eShield for 1 crore sum assured of 30-year non-smoker male is 13,386.
It also gives Accident Death Benefit Rider along with the online term plan.
Learn More About SBI Life eShield Plan.
Max Life Online Term Plan
The company is as old as HDFC Life and ICICI Pru Life. It is fourth largest private life insurer. It has good management and good business practices. Due to better service, the Max Life has earned a good reputation.
The claim settlement ratio of Max Life is good 93.9%. It is better SBI Life.
The Solvency ratio is also better than HDFC Life and LIC.
Among all the above online term plans, the Max Life online term plan is the cheapest. The premium of this plan for 1 crore sum assured of 30-year non-smoker male is Rs 8,473.
The insurance plan gives ‘accidental death benefit’ rider and monthly payout facility.
Know more about Max Life Online Term Plan.
|Online Term Plan||Premium||Claim Settlement Ratio||Solvency ratio||Rider||Cover Upto age|
|HDFC Life Click 2 Protect Plus||11,830||94.0%||1.94||ADB, Staggered Payment option||75|
|ICICI Pru iProtect||12,481||94.1%||3.72||ADB||65|
|SBI Life eShield||13,386||91.1%||2.28||ADB||70|
|Max Life Online Term Plan||8,473||93.9%||4.85||ADB, Monthly Payout||70|
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FAQ on Best Online Term Plans
Q1. The claim settlement ratio of life insurance companies belongs to more than one financial-year-old? Is this data reliable?
Ans. The data of claim settlement is published by the IRDA in its annual report. The annual report is released in January of next year. Because of this lag we get belated data. We haven’t other option hence, we have to compare on this basis.
Q2. The claim settlement ratio is of all policies of a life insurance company? Does this give the true picture of the term insurance plan?
Ans. Actually not. But we don’t have separate data for term insurance plan. I agree that IRDA should give separate data of death claim settlement.
Q3. Is the solvency ratio a guarantee of good financial health of insurance company? Is there no chance of financial fraud.
Ans. Insurance company itself gives data about the solvency ratio. IRDA has only mandated to follow the rule. IRDA also check the financial statement of an insurance company. However, there can be a Satyam-like fraud. Where, even the regulator could not sniff the irregularities. That is why I have given more weightage to good managemet and parent group.
Q4. Since, LIC is backed by the government, should I choose the LIC e-Term?
Ans. If you really need ultimate peace of mind and can afford the premium, LIC would be a better choice.
Q5. Max Life Online Term Plan is too cheap to other contenders. Is this not attractive.
Ans. Of course! the online term plan of Max Life is attractive. The solvency ratio and settlement ratio is also good. But, It does not have a strong parentage. Also, becuase of low premium, an insurance company becomes more vulnerable. It has the little leeway.
In this post, I have explored the best term insurance plans in India for 2016. The five option can confuse you. If this is the case, asess your pocket and and experience with the insurance company. For Further help, You can use my term insurance evaluator. It will end your confusion let you choose the best term plan.
Choose the best term plan and act as soon as possible. Becuase you can’t procastrinate on the term insurance. It is a must.