Here are some customer satisfaction metrics that might be useful in evaluating life insurance companies in India. I have taken 2 metrics to measure the same:

• Customer Churn ( Percentage of policies lapsing after Year 1)
• Customer complaint resolution

Looking at the customer complaint resolution data actually surprised me !

From the above data, one can infer that:

• There is not much to compare between the performance of different life insurance companies in India.Most of the insurance companies have been proactive in resolving customer complaints. “What gets measured” improves!
• Religare Aegon and Birla Sunlife seem to be the only outliers. Religare Aegon looks particularly bad in this respect.

Now lets look at customer churn. This measures number of policies that “lapse” after one year. This might give us a clear indication of mis-selling by the insurance companies as well as customer loyalty.

Clear LEADERS emerge here:

• LIC of India is doing very well despite such a large customer base. Even SBI Life Insurance is doing a good job of customer retention.
• Among private insurance companies, HDFC Life is much ahead of the competition
• ICICI PruLife is the worst with 40% of customers churning out!

This data also proves that cheapest is not always the best! Now we know why many insurance companies don’t like to share this customer satisfaction data with their customers. It hurts!

One of questions often asked by clients while buying term insurance is- Can I trust private insurance companies or should I stick to government providers like LIC of India, SBI Life etc.?

LIC of India has been the pioneer in the insurance sector and for many people in India life insurance means LIC. It has built a name for itself by being in the market for so many years. Also if you look at their IRDA claim settlement ratio and customer service, it is above average. If that is the case- why should I look anywhere else?

The answer lies in term insurance premiums. LIC of India actually did a disservice when its agents promoted insurance as an investment product. So when private insurance companies in India entered the fray, they too copied the LIC model and their agents did huge mis-selling of insurance products. Today when I talk to insurance executives, they are just not able to sell new insurance. At the same time, many private insurance companies are using technology to offer low cost insurance products to the people. If you compare the costs, the costs of these online policies are almost half that of offline policies offered by the government owned insurance companies. The answer lies in commission. Most of the agents earn 70-75% commissions on “endowment” or “investment ” products while commissions for term insurance policies are less than 20%. Hence,the companies are able to pass on these cost benefits directly to the consumers.

As far as reputation goes, companies like HDFC Life, ICICIPru Life, Kotak Life or Aviva Life are reputed companies in their own right. They were responsible for damaging their brands in the past but now are making amends by offering superior products ( just like what they did in banking). Many people ask me- What will happen if a company goes down under? I think you are well protected in this case because IRDA has put very stringent solvency requirements on insurance companies.

In my opinion, one should compare these simple things while buying a “term insurance plan” (rather than go by old perceptions)

• Available coverage
• Price
• Customer Service
• Claims Settlement Ratio

Don’t get too hung up on buying from the government players only. Once the private players are allowed to have 49% FDI, you will see even better service from the industry.

We are currently seeing a lot of demand for private insurance products as they are very affordable. Also in terms of claims, their processes are very streamlined provided the insured person has provided correct information at the time of buying the insurance. What is our opinion/experience on this topic?

Click here to get the best term insurance plan for your needs.

Choose Best Term Insurance Plan in India

What is term insurance?

Term insurance is the cheapest way to protect your family’s finances if worst happens to you. In this article, we will look at how to select the best term insurance plan in India that meets your needs.
Term insurance pays you a fixed amount if you die within a fixed term. So if you take a cover of say 1 crore for 20 years, it will pay 1 crore to your family if you die within next 20 years. You sincerely hope that this is one policy you don’t claim!!

Should I be getting Term insurance?

Many people in India still view life insurance policies as an “investment product”. The other day I met a friend who cancelled his term insurance policy in the second year when he came to know that he won’t get anything in return!

Insurance needs to be viewed as “protection” against the worst case events in your life.In my view, a term insurance policy is the real LIFE INSURANCE  and the ONLY life insurance you might need. I have heard people say- “If I die, then what is the use of money?”

A better question to ask is – ‘ How would my near and dear ones cope financially if I die?” If you have taken a home loan or a student loan, do you really want the debt burden to pass on to your family?

As indicated above, this is all about PROTECTION. I think this is also about being RESPONSIBLE.

How much Term insurance should I take?

It depends. As a rule of thumb, insurance companies allow 10 times of your annual income as the maximum cover. The best term insurance plan in India for you should cover the total of :

• Existing debt ( home loans etc.)
• Money required by your family to maintain their existing lifestyle ( in your absence).
• Existing life insurance coverage( needs to be subtracted from the required coverage)
• Premium paying capability- You can  always increase your cover as your income increases.

How long should the cover last?

As the premium charged by companies for older people get expensive, if you are confident of repaying all your debts etc by 60 and see your children settled by then, one should not extend the term covers beyond that.

IMPORTANT POINTS TO REMEMBER

• The best term insurance plan in India for you should have the right amount of cover and the correct type of policy.
• Carefully consider your premium paying capacity and what you’d need at the end.
• Quit smoking and you might get much cheaper insurance rates.
• A healthy person will find it easier and cheaper to get insurance. So focus on living a healthier life.
• SWITCH immediately if your old insurance is expensive. With the introduction of many online term insurance plans in India, insurance costs have come down substantially.
• ALWAYS answer questions accurately – your claim might be rejected if you have given wrong information to the insurers.
• DO NOT BUY riders without good advice. These carry a lot of hidden things. Stick to basics.
• DO NOT go for very long duration covers. There is no point getting insured till 75!

So get yourself covered NOW. Even before you start thinking of tax savings or ‘wealth creation”, first job should be to protect yourself and your family from the uncertainties of life.

So I’d recommend you to ACT NOW. Never leave anything to chance.