Are you searching for the best term insurance plan in India? Do you want a term insurance plan which can take care the expenses of your family in your absence? Do you want a term insurance cover at a reasonable price?
I was in the same situation some years back. After the marriage, I took a term plan of Rs 20 lakh. But once I have children, the insurance cover seemed insufficient. Like you, I also wanted to get the best term insurance plan which can provide money for the livelihood of my family. I wanted a term insurance cover which can provide money for the education of my children.
After Assessing my insurance need, again, I was searching for the perfect term insurance plan for me. Buying a good term plan was not easy this time. The whole term plan market had changed. Now we had cheaper online term plans. But big companies were charging twice than the new private companies. There was confusion. Should I go for the cheaper alternative or rely on the big names? After much deliberation, I devised a process to choose the best term insurance plan.
I have discussed this process in my post – What Is Term Plan In Life Insurance and How To Choose. Last Year, I wrote a post which helped you to choose the best term plan of 2014. It was one of the my top 5 posts at Planmoneytax.com
Since I have posted that article, many things has been changed. Now We have updated claim settlement ratio. Insurance companies have also changed their premium. I also wanted to revisit the post. The present post contains new data and slightly different approach.
Also Read: Life Insurance Plan Selection Guide
What Do You Want In The Best Term Insurance Plan
With my experience, now I know your requirement from a best term plan. I can understand your concern and needs.
The Insurance Company Should Be Reliable
By going through the comments of the readers, I did understand that people are very careful while choosing the insurance company. Their foremost concern is the claim settlement. As, they would not be there at the time of claim settlement. People want a reliable insurance company as the claim amount would be a big one.
However, it is very difficult to know the reliability score of the insurance company. Which company is more reliable? The Goliath LIC, the matured ICICI PRU Life or aggressive HDFC life. There are other smaller companies which are promoted by the big corporate houses.
The Best Term Insurance Plan Should Be Affordable
Till some years back a term plan cover of Rs 1 crore from the big companies used to cost Rs 20,000 annually. People avoided the costly term plan because it did not give any return. Now the online term plans have changed the insurance market dynamics. Now you can get an online term plan of Rs 1 crore cover, only at the premium of about Rs 7000. Because of the affordable rate of online term plan, now people take adequate insurance cover.
Indeed, the premium amount has become a critical factor in the selection of the best term insurance plan.
You Should Have The Option of Riders
The riders give you added benefit. You should have the choice of these riders. Some insurance riders are really very useful. Such as accidental death benefit rider, critical illness premium waiver rider and terminal illness rider. However, not every company gives the rider with term plans.
Easy Claim Settlement
The insurance claim of term plan is the last thing one will want. But whenever it is needed, it should be hassle-free. No one wants that his/her family would struggle to get the cover amount. Hence, you must like to know about the insurance company which easily settles the insurance claim
Parameters To Judge The Best Term Insurance Plan
Now, we know your expectation from the best term insurance plan. Hence, we need to pick a term insurance plan which has the desired qualities. To find the best term insurance plan, we should test term plan on the some parameters.
- Claim Settlement Ratio
- Solvency Ratio
- Premium Rates
- Policy Features
- Customer Service
- Settlement Time
Claim Settlement Ratio Tells About Business Practice
The claim settlement ratio tells the number of claims settled against 100 claims made. It instantly tells about the practice, attitude and intent of the insurance company. If a company can’t settle most of its insurance claims, It is going to bother you as well. Indeed, you should not worry about the claim settlement. You pay the premium every year to mitigate any unfortunate financial condition. If an insurance company does not pay the insurance cover, the total paid premium goes in vain. You need maximum insurance as far as the claim settlement is concerned.
To give you the correct picture, insurance regulator IRDAI keeps tab on the settlement of insurance companies. IRDAI publishes the claim settlement ratio of each life insurer every year. I am giving you recent claim settlement ratio if life insurance companies. I have picked this table from my other post on claim settlement ratio. I have grouped the insurance companies on the basis of their claim settlement ratio. You can read more about the best claim settlement ratio of the companies.
Death Claims of Indian Life Insurance Companies
|Rating||Life Insurance company||Claims||Claims Settled (Numbers)||Claims Settled (Amount)|
You can see there are companies which could not settle even half of the insurance claims. You must avoid these companies at any cost. Even, you should try to avoid the companies which have ranking score less than 3.
Solvency Ratio Shows The Financial Condition
You take a term plan for long years. The insurance cover can be needed any time till the tenure of the term plan. What if after 20 years company is unable to pay the claim amount. What if a company can’t pay large insurance claims at a time. Therefore, like the business practice of an insurance company, the financial condition is also very important. The financial condition of an insurance company is assessed by the solvency ratio.
|Rating Score||Insurance company||Solvency Ratio|
|STAR UNION DAI-ICHI||2.38|
Solid Management Maintains The Standard
The professional management of the company propagates best practices. A good management does not push for the wrong products. It does not reward the agents who mis-sells. A good management keeps the finances in a healthy condition so that it can easily settle the future claims. Actually, A good management makes an insurance company good or bad.
However, finding an insurance company which has good management is not easy. You can’t meet the management of an insurance company. Neither you can monitor the working of management. Therefore, to know the management practices you need to watch the business practices of the company closely.
You can check with the parent company. Whether a parent company has good reputation in the corporate world? What is the financial condition of the parent company? The parent company or group companies indirectly affect the insurance company.
How is your experience with sister concern. Many of the insurance companies are promoted by the banking groups.
Check the attitude of the insurance agent. Does agent want to sell you a wrong product? An agent represents the insurance company. He/she gives an idea about the management of the insurance company.
Premium Rates To Get the Best Deal
Often we put price first when we shop a product. But for the best term insurance plan price is not very important. The price comes after all the above factors. First choose the best term plan on the basis of all the above parameters. If you have more than one option, compare the term plan on the basis of premium rates. I am giving you the latest premium rates of the online term plan available in the market. These are the cheapest plan of the corresponding companies. The premium given below is for a person with these details.
Age: 30 years
Tenure: 30 Years
Cover: 1 crore
Non Tobacco User Healthy person
Online Term Plan
|5||Reliance Online Term||7,319|
|AEGON Religare iTerm Life Insurance||8,090|
|Edelweiss Tokio My Life||8,090|
|Bharti Axa Life eprotect Plan||8,202|
|Kotak e-Preferred Term Plan||8,287|
|Max Life Online Term Plan||8,315|
|Canara HSBC eSmart Term Plan||8,740|
|IndiaFirst Anytime Plan||9,214|
|HDFC life Click2 Protect||11,911|
|ICICI Pru iProtect||12,247|
|SBI Life – eShield||13,135|
|Bajaj Allianz iSecure||13,438|
|1||LIC e Term||16,405|
You can see the LIC e term insurance is the costliest. While the Reliance online term premium is less than half of the LIC e term. There is a big difference in premium rates. Take your decision after careful assessment.
Rider For Added Benefit
Online term plans are the cheapest and desirable insurance policy. But, these plans don’t have many riders. Riders fulfill some specific insurance requirements. You have to pay extra premium to avail the benefit of riders.
- Among few riders, the accidental death benefit rider of ICICI Pru iProtect is a notable one. This rider gives an added sum insured if death happens because of the accident. You can get accidental death benefit of Rs 50 lakh by paying extra Rs 2,300 per year.
- HDFC Click to protect plus also gives the accidental death benefit rider. But It does not pay a lump sum on the death. It is not comparable to other online term plans. Therefore, I have not listed it there.
- Max Life online term plan also gives comprehensive accident death benefit rider. You can take Rs 50 lakh accident benefit rider by paying premium of Rs 3,150 per year.
Extra Facility With The Term Plan
Some companies give extra facility with pure term insurance. You can look at it and evaluate holistically.
- Edelweiss Tokio gives the monthly payout option with its online term plan.
- Reliance online term plan gives discount to female policyholders.
- Aegon Religare has inbuilt terminal illness benefit with its online term plan.
- Bharti Axa promises to pay at least Rs one lakh within 48 hours of the claim.
- The Aviva iLife term plan bears the medical cost.
Customer Service For Better Experience
Customer service plays a very crucial part in your decisions. Sometimes, bad customer service repulses you from a good insurance company. However, it is difficult to compare the customer service of an insurance company. I have used a trick for this. You can also use this method. I have visited the consumer complaint forum. In these forums you can read the complaints against the insurance company. It gives you an idea of the customer service of the companies. While you assess the customer service of a company, please keep in mind the customer base as well. A company with a large pool of customers would naturally have more complaints.
Little Settlement Time Reduces Your Pain
The term insurance plan promises to give the assured amount to the family of the deceased. But what if it takes months to settle the claim. It can be very harassing. Why should a family suffer because of the delay on the company’s part. It also tells the attitude of insurance company towards the claimant. Fortunately, the new insurance bill has given a big relief in this regard. It says an insurance company can’t reject a claim after 3 years. It means after 3 years an insurance company would not delay the claim settlement because they can’t contest it.
According to the insurance rules, an insurance company must settle the claim within 30 days of submission of complete documents if an investigation is not required. If required, then they are expected to settle the claim within 6 months. The rules mandate that insurers should raise additional documentation query within 15 days of lodging the claim.
Best Term Plans In India- My List
I have given you the parameter to choose the best term plans in India. You can use the data and your experience to choose the best one. Remember, every parameter has its own weightage. The premium and settlement ratio can’t be equally important. In my opinion you should fix weightage of the parameters according to the below table.
|Claim Settlement Ratio||30%|
To reach on final decision you should give the number to insurance companies on each parameter on the scale of 1 to 5. Multiply this number to the given weightage. Add up all the resultant score. The total score of every company will give a fair evaluation of the company. This exercise can be done with every life insurer. Following this method you will have the foolproof best term plan of India.
To make things easier I have made a calculator based on the above formula. In this calculator, I have already given weightage for each parameter. If you wish, you can also change the weightage, but remember the total must be 100.
For a term plan, you should give your rating score to each parameter. As you finished the rating, click on the ‘Evaluate’. You will have the final score of the given term plan. I say this final score ‘Plus Points’. Using this calculator you can evaluate the term plans one by one. Among them you can easily pick the best term plan of India.
Please note, in any case, you should not take a term plan which has plus points less than 60. In this calculator, I have given the rating points to LIC e-Term. You can fill your term plan and your values.
Top 3 Best Term Plan Of India In 2015
The LIC has launched this online term plan a year back. Since then it has become very popular. The online term plan of LIC is 40% cheaper than offline term plan. However, for a non tobacco user the insurance cover of more than 50 lakh is more beneficial. For insurance cover below Rs 50 lakhs LIC e-Term is costlier as it does not differentiate between smoker and non smoker. For a non smoker a insurance cover of Rs 50 lakh is cheaper than an insurance cover of 37 lakhs. You can double your insurance cover, by increasing the premium just by 48%.
The LIC e-Term is the costliest online term plan. It takes such a high premium because of the pedigree. LIC is backed by the government and it is free of default risk. Also, LIC has the highest claim settlement ratio. It has a high reputation in the mind of the public. LIC has the lowest solvency ratio, but it gives assurance because of the government guarantee.
You can buy LIC e-term online. I have detailed the step by step process of LIC e term purchase.
HDFC Click 2 Protect
This is one of the most publicized online term plan. HDFC tried hard to make it competitive. Among private insurers HDFC Life is the oldest one. The HDFC life has consistent good claim settlement ratio. It’s UK partner ‘Life’ is aggressive and after the new insurance bill it is increasing shareholding. However, the solvency ratio of HDFC life is not so good. It is more than LIC but less than ICICI PRU Life. The online purchase of HDFC click 2 protect is very easy.
ICICI Pru iProtect
The ICICI Pru iProtect is the online term plan of ICICI Pru Life. It is costlier than HDFC click 2 protect. The settlement ratio of ICICI Pru is as good as the HDFC Life. It has gradually increased the settlement ratio. The ICICI Pru iProtect also gives you the option of accident benefit rider. The plan is available up to 75 years age.
The good thing about these 3 best term plan is the names behind it. LIC, HDFC and ICICI are established names of India. While LIC has specialized in insurance business. ICICI and HDFC are running professional banking services. If you want maximum assurance, you must take the LIC e term, otherwise ICICI Pru iProtect and HDFC click 2 Protect is also a very good choice.
What is your experience while buying a term insurance plan? Share your opinion. Do you find this article helpful. Please do share the link in your social network.