Compare Term Insurance Online

You have decided to get a term insurance cover to ensure your peace of mind and financial security for your family. Since you have already made this decision, we assume that you have conducted a detailed research on what are term insurance plans. If not, then we recommend you first browse through our complete guide to understanding and comparing term insurance plans online or understand it here.

Why do I need term insurance?

Imagine how your family will cope up with financial liabilities if you were to to die tomorrow or say in next 3 years. How would they pay the home loan or take care of basic family expenses? You should consider term insurance if you are concerned about how your family would manage in the event of your unexpected death.

How does term insurance work?

Term insurance pays out a fixed sum to your family on your death.

How much cover do I need?

The amount of insurance depends on your personal situation. Generally experts suggest a cash sum equal to ten times of your annual income.You might want a term cover just to cover your pending home loan or you want to cover for an amount that will cover your family�s future expenses including marriage of your children or their education. While you may decide to go a very high cover, you also need to consider your annual premiums. With term covers getting cheaper, one should go for a slightly higher covers.

There are several insurance companies offering online term insurance plans in India.  We have chosen 10 insurance companies for comparison, based on their market reputation and number of online term plans sold.

1. Aegon Religare
2. Aviva
3. Bajaj Allianz
4. HDFC Life (Click here for quick overview on HDFC term plan)
5. ICICI Prudential
6. Kotak Life
7. LIC
8. Max Life (Click here for more details on Max Life term plan)
9. PNB MetLife
10. SBI Life

 

Compare Term Insurance Plans Online

We will do a detailed online term plan comparison based on the following parameters.

1. Eligibility
2. Riders and Premium Waiver- For details check Riders on term Insurance Plans
3. Claim Settlement Ratio
4. Solvency Ratio
5. Premium Affordability
6. Grievances Resolved

Parameter 1: Eligibility

Every insurance company has certain eligibility criteria to qualify a potential policyholder to invest in its online term plan. These eligibility criteria are mentioned in the table below.

The table below show comparison of term insurance companies eligibility criteria. As you may see, there is hardly any difference in the eligibility criteria across these insurance companies.

 

Parameter 2: Riders and Premium Waiver

A rider is a provision or a modification to an insurance policy that is purchased separately from the basic policy and that provides additional life cover and other benefits at an additional cost. These most popular riders in term insurance plans are accidental death, critical illness and hospitalization.

A waiver of premium is also a rider. It the policyholder dies, then the insurance company gives this premium waiver facility on the policy the nominee. That is, the policy continues and remains active, but the premium is paid by the insurance company till the end of the policy term.

Except Aviva, LIC and PNB MetLife, all other insurance companies provide accidental death benefit rider. Whereas, the premium waiver facility is available with only 6 of these companies.

 

Parameter 3: Claim Settlement Ratio

Claim settlement ratio refers to the total number of death claims settled by an insurance company. This calculation is done by dividing the total number of death claims received by the total number of death claims settled. For example, if an insurance company receives 1000 death claims and settles 900, the claim settlement ratio of that company would be 90%.

The higher the claim settlement ratio of the company, the better it is for online term plan buyers. It indicates that in the event of the unfortunate death of the policyholder, the probability of the nominee getting the sum assured is higher.

Now, you may see from the table below that LIC followed by Max Life and ICICI Prudential have been maintaining the most consistent claim settlement ratios since last two years. However, would you choose an online term plan from an insurance company just because  it has the highest claim settlement ratio? For instance, LIC in this case? You shouldn’t. Read this article further to understand why.

(Source: IRDA Annual Report and Company Disclosures)

Parameter 4: Solvency Ratio

You may wonder what is solvency ratio and why you should consider it while choosing ans comparing online term insurance plan.

The solvency ratio of an insurance company is a measurement of its assets vs liabilities. It is the size of the capital of an insurance company against all risks undertaken by it. In simpler words, solvency ratio determines whether an insurance company has enough assets to meet its obligations in the long term. Is it financially strong enough to pay claims? Especially mass claims during natural or man-made disasters?

Currently, as per IRDA guidelines, insurance companies are required to maintain a minimum of 1.50 as the solvency ratio.

Among all insurance companies, Bajaj Allianz has the best solvency ratio, followed by Max Life.

(Source: IRDA Annual Report 2013-14)

Parameter 5: Premium Affordability

An insurance company may be reputed as well as have a good claim settlement and solvency ratio. But, does the price of the online term plan fit into your pocket? Online term plans are about 30 to 40% cheaper than offline plans. But the premium may drastically differ between online term plans of various companies. Let us compare term insurance premium online.

We have calculated premium for a 30 year old, non-smoking male for a sum assured of Rs50 lakhs for 30 years. Riders are not included in the calculation.

The table below shows that the premium of LIC is the highest, almost twice more than many other companies.  So, if you were planning to choose LIC e-Term plan based on its highest settlement ratio, you may now want to change your mind!

Parameter 6: Grievance Resolved

You may be unhappy during your experience while or after buying an online term plan. You file a complaint with the concerned insurance company. The grievance redressal cell of an insurance company will look into your complaint and try to address it as early as possible. The quicker the process and higher the number of complaints resolved, better the grievance procedure is.

Below is the grievance resolved ratio based on the number of complaints. LIC tops here too with 100% resolution of complaints.  So does Aviva. However,  the number of complaints received by LIC is almost 20 times more than Aviva! Four other insurance companies – ICICI Prudential, Max Life, PNB MetLife and SBI Life have more than 99% grievance resolved ratio.

 (Source: IRDA Complaints Data)

Top 5 Online Term Insurance Plans

Based on tabulations related to six parameters above, we have compared and ranked top five term insurance plans, 1 being the highest rank and 5 being the lowest rank.

1. According to Claim Settlement Ratio
2. According to Solvency Ratio
3. According to Premium Affordability 
4. According to Grievance Ratio

 

 So which is the best online term plan? Conclusion

1. LIC has the highest claim settlement and grievance solved ratio. However, its term plan is the most expensive of all. Moreover, it just manages to meet the minimum solvency ratio as per IRDA guideline.

2. Bajaj Allianz has the highest solvency ratio, 90% plus claim settlement ratio and 95% plus grievance solved ratio. You may choose its term plan, given that you can afford its premium which is the second costliest in the market after LIC.

3. Kotak Life offers the cheapest term plan. It also has a good solvency ratio and grievance solved ratio. But, its claim settlement ratio is under the gold standard of 95%.

4. Aviva online term insurance plan would have made a good choice, given its premium affordability, high solvency ratio and grievance resolved ratio. But, its claim settlement ratio performance is disappointing.

5. Our vote goes to MaxLife Online Term Plan. It is the only insurance company which has been ranked among top 5 in each of the four parameters – claim settlement ratio, solvency ratio, premium affordability and grievance resolved ratio.

You can decide to take life cover from one or more company after the online term plan comparison. Each online term plan listed above has its own features and benefits to suit and customize your requirements. But, do remember that these statistics should not be the sole criteria to choose the right online term plan. Make sure whichever plan you choose should also meet your investment goal and financial needs in the long run.