Best Term Insurance Plan
Please see an updated version of the comparison here- IRDA Claim Settlement Ratio for 2015 – Compare best online term insurance plans
As online term plans have gained popularity, almost all the life insurance companies have come up with their online term plans and claims to have the best term insurance plan. We usually view two criteria for comparing the term plans- price and claim settlement ratio.
When it comes to price- you will find many cheap plans from Aegon Religare, Aviva, Reliance, Max Life, Bharti AXA etc. Most of these (barring Max Life) have claim settlement ratios that are below 90%.
When it comes to claim settlement ratio- Most of the good players in the market like LIC, Max Life, HDFC Life, ICICI Pru, Kotak, Bajaj Allianz etc have claim settlement ratios that are closer to 95%
Combining these two criteria , here is our opinion of the best term insurance plans in the market:
Max Life Online Term Plan – Currently the Best Term Insurance Plan in India
- Not only is it one of the cheapest plans, it scores really well in IRDA claim settlement ratio and complaint resolution.
- Also Max Life carries a premium brand image in the market. As they were a little late to launch online term plan, they have priced it aggressively when compared to the likes of HDFC Life and SBI Life.
HDFC LIFE Click2Protect– Most consistent when it comes to claim settlement ratios
- Although this is not the cheapest policy in the market ( about 20-25% expensive), it has maintained high claim settlement ratios for the past several years. You can check the historical claim ratios on Trucompare.in
- Good brand in the market as it has the HDFC pedigree. Also it has wide branch network in the country.
Bharti Axa, Aviva, Aegon, Reliance Term Plans – Cheapest but not the best
- These plans are cheap but their IRDA claim settlement ratio is below industry average and definitely lower than the rest
- Most of the claim ratios are in the 80s unlike SBI or LIC or Max Life which are well above 90%.
LIC,SBI Life, Kotak Life, ICICI PrulifeTerm Plans – Good claim settlement ratio but not the cheapest
- LIC scores very high on claim settlement ratio ( around 97%) but their pricing is double that of something like Max Life. I won’t recommend spending so much on a term plan! The reason for the same is the fact that LIC’s bread and butter is single premium and endowment plans which are sold through agents.
- SBI Life, Kotak, HDFC Life’s online term plans are about 30-40% expensive than the cheapest plans in the market. Almost all of them have claim settlement ratios that are in excess of 90%.
- All these carry good brand image in the market and thats why they try to charge extra for the same.
Compare the premiums and online claim ratios ( along with historical trends) at Trucompare.in
IRDA Claim Settlement Ratio 2013-14 – Compare Term Insurance Plans
Update- We have updated the claim settlement ratios of insurers for 2014-15 on our website. Compare now to view details. We have written about Max Life claim ratio for 2014-15 here.
Following is the statistics for IRDA Claim Settlement Ratio 2013-14 for individual death claims by insurance companies. I have tried to take some of the popular brands in the market.
| No of Claims Recd | Claim Amount | Claim paid | |
| Aegon Religare | 324 | 26.34 | 81% |
| Bharti AXA | 950 | 26.14 cr | 88.13% |
| Aviva | 2033 | 119.83 cr | 84.01% |
| HDFC Life | 6824 | 216.94 cr | 94.01% |
| Edel TOKIO | 48 | 4.5cr | 60.00% |
| Bajaj Allianz | 21658 | 440.98 cr | 91.29% |
| Kotak | 2687 | 71.09 cr | 90.69% |
| SBI Life | 12960 | 255.28cr | 91.06% |
| Birla SunLife | 8071 | 268 cr | 87.76% |
| ICICI Pru Life | 12608 | 278.6cr | 94.1% |
| Max Life | 8896 | 214.6 cr | 93.86% |
| Reliance Life | 17241 | 202.96 | 81.97% |
| Tata AIA | 4225 | 94.80 | 89.68 |
| LIC | 746212 | 8475.26 cr | 98.14% |
- Among the private players Max Life, HDFC Life, ICICI Pru rank as the Top 3 when it comes to claim settlement ratio. Premium wise Max Life is the cheapest and ICICI PruLife is the most expensive
- Aegon, Axa, Aviva are cheap but don’t have great claim settlement ratio
- LIC has the best claim settlement ratio but their online term insurance is damn expensive.
You can compare online term insurance plan premiums and historical IRDA claim settlement ratio data from 2010 to 2014 using our term insurance premium calculator.
5 reasons why people in India don’t buy term insurance
Being in the business of financial advisory, I find many intelligent and educated people who are without adequate insurance cover.Sometimes one wonders why people don’t buy term insurance in India despite it being such a cheap product. Here are some of the reasons:
DO NOT FEEL THE NEED TO BUY TERM INSURANCE
As term insurance is not mandatory, many people don’t see the value in it. Just because a car insurance is mandatory or a home loan company mandates that you buy term insurance, people do not see a lot of value in buying insurance.They consider it a waste as they are not going to get anything in return. As insurance is not a tangible product ( unlike a car or house) and whose benefits are usually available in the future,many people ignore it. Also unlike western world, where insurance is considered extremely important, in Indian context this is a fairly new concept and we are not used to it.
DO NOT UNDERSTAND FINANCIAL RISKS
Most of us are bad at estimating probabilities, hence we many people prefer to be in denial, thinking- this won’t happen to me. Call it “bhagwan bharose”. Hence we prefer to be self insured rather than getting insured for our risks by an insurance company. Many others are not educated about their risks and their families pay heavily in times of a sudden death in the family.
LACK OF MONEY
Since insurance costs money, many people in the past couldn’t afford the same. With the advent of cheap online term plans, it has become easier and cheaper to buy insurance cover.
LACK OF TRUST IN INSURANCE COMPANIES
Since life insurance was sold as an investment product to many uninformed people in India, many people are just wary of anything to do with life insurance. As a result, they refuse to indulge in any conversation related to life insurance. They are sometimes pleasantly surprised that they can get such higher term insurance coverage by paying such small amounts.
CONFUSED ABOUT INSURANCE PRODUCTS
Insurance companies sell so many variations of life insurance products that a customer usually feels lost and confused. As a result, he is not able to decide as to which product is suitable. Term insurance is the simplest of all insurance product, which unfortunately is never pushed by your neighborhood agent.
If you also fall in any of the above categories, I’d suggest that you educate yourself by finding more about term insurance and get a premium for your age by getting a quote at Trucompare. Make sure you buy the best product that meets your needs.
Never leave things to chance.
Do I Need Term Insurance Plans?
A reader query:
I am a 32 year old person working in the IT industry. I am already having insurance from SBI ( ULIP) and LIC ( endowment plan) with total premium of about 1 lakh per annum. I am not too sure if I should buy a term insurance when I am not going to get anything in return.
– Rajeev Gupta, Bangalore
Our response:
Term insurance plans are for pure protection and covering your liabilities. You might have made the mistake of buying insurance for investment purpose. Your current coverage won’t be more than 25-30 lakhs on endowment and ULIP plans.
Imagine how would your family cover your liabilities of a home loan or educating your child in the unfortunate case of your death. All of us understand the uncertainty of life and buying term insurance is the only way to protect your loved ones from financial misery. In your case, you can easily get a cover of 1 cr by paying a small premium of 8000-9000 per annum, which is very much affordable and ensures that you have an adequate cover. Do not view term insurance plans as financial investment, it is an investment in the protection of your family.
For exact premiums of term insurance plans and comparing between different insurers like Aviva, Aegon, SBI Life etc, please get a quote today and buy a policy online.
Term Insurance Comparison – Which is the Best Term Insurance Plan in India?
Term Insurance Comparison
In earlier posts, we have looked at various criteria that can be used for term insurance comparison. Although it is difficult to say which is the best term insurance plan in India, one can keep the following policies in mind before making a buy decision.
HDFC LIFE Click2Protect– Currently the Best Term Insurance Plan in India
- Although this is not the cheapest policy in the market ( about 20-25% expensive), it scores really well in IRDA claim settlement ratio and customer retention metrics.
- Good brand in the market as it has the HDFC pedigree.
Compare the premiums and online claim ratios at Trucompare.in
AVIVA iLife– Value for Money
- One of the cheapest in the market.
- Scores reasonable well in claim settlement ratio and customer retention metrics. They can give serious competition to HDFC if they improve upon their claim settlement ratios.
- Global brand in the insurance market. In UK, they are considered a very decent brand
BHARTI AXA and RELIGARE Aegon – Cheapest term plans
- One of the cheapest in the market.
- Average to low scores in claim settlement ratio of insurance companies and customer retention metrics.
- Trying hard to create a more trustworthy brand.
Kotak, Edelweiss Tokio and Bajaj Allianz– Worth consideration
- Edelweiss is cheaper than the rest but has limited track record. At the same time,the company is making strides to create a brand. It will be good to see the IRDA claim settlement ratio data in 2012
- Kotak Preferred allows you to add the sum assured at a later stage in life.
- Bajaj Allianz is one of the best managed insurer in the country.
SBI Life – For those who prefer public insurers
- Costs much lower than LIC but higher than the likes of HDFC,Aviva or Religare Aegon
- Scores good in claim settlement and customer retention metrics.
- Trustworthy brand in the market
LIC Term Plan– Good claim ratio but damn expensive
- For those, who want to go for LIC, unfortunately they have outpriced themselves out of the market. Currently they cost 4 times the cheapest plan in the market.
- One might consider shifting to LIC term plans as and when they come up with a cheaper and more competitive option.
I’d recommend a revisit to the article on choosing term insurance to get the basics right for term insurance comparison before deciding on the cover and the term. It is important to insure your life before you think of anything else. For a quick quote or advice specific to your situation, compare the best term insurance plans online.
Compare the premiums and online claim ratios at Trucompare.in
IRDA Claim Settlement Ratio of Life Insurance Companies
As indicated in my earlier post, IRDA claim settlement ratio might be an important factor in determining the best term insurance plan in India. Following is the stats for 2011-12 for IRDA claim settlement ratio for individual death claims by insurance companies. I have tried to take some of the popular brands in the market. I have also included premium for a 1 crore/30 year old/30 year person in order to make some cost comparisons also.
| Premium(30Ys) | No of Claims Recd | Claim Amount | Claim paid | Rejected | |
| Aegon Religare | 8202 | 274 | 16.15 cr | 66.00% | 33% |
| Bharti AXA | 8202 | 935 | 23.3 cr | 87.70% | 10.80% |
| Aviva | 8279 | 2240 | 71.5 cr | 89.50% | 9.50% |
| HDFC Life | 11911 | 5149 | 107.23 cr | 96.17% | 3.63% |
| Edel TOKIO | 12921 | 1 | 0.05cr | 100.00% | 0% |
| Bajaj Allianz | 14169 | 27200 | 423 cr | 90.61% | 6.28% |
| Kotak | 16574 | 2949 | 85 cr | 89.00% | 5.24% |
| SBI Life | 18875 | 11864 | 185cr | 95% | 3.19% |
| Birla | 19214 | 10900 | 280 cr | 90.94% | 8.78% |
| ICICI Pru Life | 23993 | 14829 | 225cr | 96.53% | 3.16% |
| Max Life | 26405 | 9031 | 216 cr | 89.84% | 8.58% |
| LIC | 37753 | 731336 | 6873 cr | 97.42% | 1.30% |
- It is clear from the above table that guys like LIC and SBI have high claim payment ratios but LIC also has one of the highest premium in the market!
- Edelweiss Tokio’s stats are insignificant
- Bharti AXA, though cheap is still in its early days
- Among bigger private players, Aviva,HDFC Life and Bajaj Allianz look decent
We will continue to provide you with updated IRDA Claim Settlement Ratio of Life Insurance Companies every year. To compare all these details online and know exact premium for the required coverage, click here. Please visit www.trucompare.in to get an online premium quote delivered to your email.
FAQs- Term Insurance
Why do I need term insurance plan?
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 buying term insurance plan if you are concerned about how your family would manage in the event of your unexpected death.
How does term insurance work?
Term insurance plan pays out a fixed sum to your family on your death.
Is anything excluded?
Term insurance plans will typically not pay out if the death was due to suicide, alcohol or drug abuse, participation in war or terrorist activities etc.
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.
What should be the duration of my policy?
This depends on length of your home loan or the duration till which your children will be dependent on you. One need not go for very long duration cover( beyond age 65) unless your situation demands the same.
How are life insurance policy prices calculated?
Term insurance plan is a function of age, duration, gender and whether you are a smoker or non smoker. Upto a cover of 25 lakhs, there is not much difference between the rates but as you tend to go higher the differential between a smoker and non smoker increases dramatically.
Are premiums fixed for the complete duration?
Most insurers would offer fixed premiums, so the price of cover remains fixed throughout the contract.
How can I reduce the costs of my policy?
Younger people pay less for their term insurance plan. Non smokers also pay less for their policies. So one way to reduce would be to quit smoking. The longer the duration of the policy and the bigger the sum assured, the more premium you pay.
I have a pre-existing medical condition. What should I do?
You need to be honest with your insurer about your medical situation and disclose all the details sought by the insurer. You should preferably go for a medical tests. You might end up paying more for your policy but if you hide things your claim is very likely to be rejected. In that case, your family won’t get any benefits upon your death.
I am over 55. Can I still buy life insurance?
Most of firms offer term insurance for older people but please note that the premiums would be much higher and you will have to undergo a lot of medical tests.
Should I go for any extras riders that I can add to my policy?
It is better to keep it simple.You can buy a separate critical illness or accidental insurance.
What kind of tax benefits are available?
You get normal tax benefits under section 80C (up to 1 lakh limit). The premium paid gets deducted from your taxable income. One should just consider this as an added benefit. The prime reason for buying term insurance should be to protect your family.
Do I have to pay tax on my life insurance payout?
The cash benefit of a term insurance policy is not liable for income or capital gains tax.
Hopefully you’ve found the answers to all of your FAQs on term insurance . To compare premiums for online term insurance, get a quote today.
Claim Settlement Ratio of Health Insurance Companies
Here is some data on the claim settlement ratio of health insurance companies in India to get their health insurance rejection ratio in last quarter – Q4, 2013. I will be updating this with more insurer data.
Claim Settlement Ratio for Health Insurance Companies
| INSURER | Claims Reported | Rejected | Rejected Claims |
| Oriental | 102690 | 121 | 0.12% |
| Religare | 4343 | 169 | 3.89% |
| Apollo | 127259 | 8040 | 6.32% |
| ICICI | 140479 | 11250 | 8.01% |
| Max Bupa | 23813 | 2202 | 9.25% |
| HDFC Ergo | 30081 | 3792 | 12.61% |
| Star Health | 55355 | 11402 | 20.60% |
Click here to find the best term insurance plan in India.
Best Health Insurance Plan – How to Select Your Health Insurance
The best health insurance policy for you is the one that meets your medical needs. In this article, we will see which factors you should consider before buying a health insurance policy.
With the increasing medical costs due to rising cost of medicines and procedures,living without a health insurance might be the biggest risk in your life. Many people are covered for their health costs by their employer but the cover is usually not sufficient to cover medical emergencies.
As medical insurance is relatively complex products with lots of “fine print”, it becomes very confusing for consumers to select the right term insurance plan. I have tried to capture some of the things that will help you buy the best health insurance plan, especially family floaters..
1. Do not go by price alone
Health insurance is not a simple product like term insurance where one can do a simple price comparison and decide to go ahead. As health insurance products come in various shapes and sizes, choosing the best health insurance plan for your needs is important. So if you decide to pick a health insurance purely on the basis of price, you might end up comparing apples to oranges. Just be aware of this problem!
2. Keep it simple.
Do not go for policies that are difficult to understand and have too many features or “ifs and buts”. Your basic objective to buy a health insurance is to cover large unexpected medical emergencies. No need to bother about regular medical bills.
3. Look for maximum entry age and renewal age
While government owned insurance companies like Oriental or United India Insurance allow a maximum entry age of 70-80 years, most private health insurance companies stop at 65.
4. Check maximum sum insured
Carefully look at maximum sum insured. Religare Health insures up to Rs.60 lakhs while companies like Apollo Munich and Star health provide highest sum assured (up to Rs.15 lakhs). Most of them insure up to Rs.10 lakhs.
5. Pre and Post Hospitalization expenses
Most companies cover 30 days of pre hospitalization expenses. Apollo Munich covers up to 60 days of pre hospitalization and 180 days of post hospitalization period.
6. Pre existing disease coverage
Most companies will cover existing illness after 4 years. Not much choice here!
7. Medical Checkup Requirement
It is always recommended that you get a medical checkup done so as to identify and declare any existing illnesses. Most companies make medical checkup mandatory for people with 45+ years of age. Oriental insurance looks to be most lenient as it required medical examination above 60 years.
8. Waiting period for claiming expenses
Many companies keep an initial waiting period before you can claim any expenses. Most companies have a 30 day waiting period ( Apollo Munich, Star health etc.) whereas Max Bupa has a 90 day waiting period! Government companies( Oriental etc.) have zero waiting period.
9. Examine expense Limits
Many insurers have sub limits on the medical expenses. For example Oriental insurance will restrict room rent to 1% of sum assured. Then some have limits on ambulance expenses, ICU expenses or some ask for a 20% payment contribution from your side. At the same time there are insurers like Apollo Munich, Reliance, Religare and ICICI Lombard( Complete Health Insurance) that work with no co payments or sub limits.
10. Study major exclusions
Most of the times, consumers are confused by the major exclusions in the policy. Sometimes it feels like exclusions are larger than what is included in the policy! Many insurers offer cheaper policies with tons of exclusions. Be careful about such policies as they are not going to give you the benefit you need at the time of hospitalization.
11. Know claim settlement ratio
Since claim settlement ratio can be a tricky metric to judge health insurance, it is nevertheless important not to pick insurers with below average claim settlement ratio. Oriental insurance scores with 90%+
12. Additional Benefits
Companies like Apollo Munich or Religare provide nice additional benefits like “no claim” or auto recharge / Restore benefit that can help you cover increased cost of medical expenses. Some also give day care treatments as well as maternity benefits. Carefully study these extras before taking the final call.
In subsequent posts, I will try to review some of health insurance products in the market which provide value for money.
Click here to find the best term insurance plan.
Are Endowment Plans, aka Traditional Life Insurance Plans, Any Good for Wealth Creation?
Since most of the life insurance policies in India are still sold as “savings and investment”, endowment plans( also known as traditional life insurance plans) are the most popular of the products. This trend was started by LIC of India ( oldest insurer in India) whose agents goaded investors to save and invest for the long term for their retirement or for their children’s education and marriage. Indians being the great savers they are, were easily lured into such plans. In other cases, these life insurance plans have been sold as the best “tax saving instrument”. And the reason for pushing these have been the commissions earned by the agent of LIC of India for these plans. Now look at the reality of wealth creation by such life insurance plans.
I will take an example of HDFC Life Endowment Plan for a 30 year old male ( results will be similar for other insurers like LIC of India).
Sum Assured- 10 lakhs
Duration- 20 years
Premium- 47000
Maturity Amount @ 6% bonus- 1357000 ( Realistic)
CAGR – 3.7%
Maturity @10% bonus – 1958000 ( Best Case)
CAGR – 7.1%
As Life insurance companies in India typically invest in government securities, your typical bonus would actually be closer to 6%( look at this bonus table from LIC of India), hence your CAGR would be around 4%. Please make a note that most of these bonuses do not compound.
Can you see the real truth behind these measly returns? Would these be enough for your future needs?
Now lets took at an alternative of buying a ” term insurance + Tax saving MF ” – this will give you the same insurance and tax benefits as the endowment policy. The intent is to compare the “wealth creation” element.
Assuming premium paid is 47000 ( same as in the endowment plan)
For sake of comparison, I have taken HDFC Life Insurance policies only
Premium for a 10 lakh life insurance policy for 20 years ( HDFC Life) – 2600
Investment of 44400 in HDFC Tax Saver for 20 years.
Rate of return- Although this fund has given 29% for last 14 years( since 1999), we will be conservative and take an expected return of about 12%.
Maturity Amount (12%)- 32 lakhs
Maturity Amount (20%)- 82.89 lakhs
Can you see how buying an endowment plan actually reduces your chance of any wealth creation! Give this illustration a thought before you buy your next endowment plan. One should never buy financial products based on “gut feel’ or “hard sell”. Look at the hard data and historical evidence.
So ask these questions from your LIC advisor before he comes knocking at your door for the next fabulous plan.
If you have been stuck in endowment plans, this might a good time to surrender or make it a reduce paid up policy ( if you have paid for 3+ years). No point throwing good money after bad!
If you are near the maturity of an endowment plan, then you better increase your coverage by buying a term insurance. If you need help with your current situation or buying life insurance policies, feel free to contact or check www.trucompare.in for an online quote.