There are around 24 Life Insurance Companies in India. All of these companies offer the term insurance product. How to shortlist the “Best Online Term Insurance Plans”?
Last year I wrote a post of “Best online Term Insurance Plans in India for 2015-A comparative list“. In this post, I concentrated mainly on Claim Settlement Ratio of IRDA for 2014-15. However, from now onward, I do not think the Claim Settlement Ratio is a most important and sole criteria in choosing your term insurance. Reason is, recently IRDA amended the Section 45 of insurance act. According to this, if the policy continued for 3 years or more, then insurance companies cannot reject the claim.
Note-I updated the claim settlement ratio of IRDA for 2014-15 in below post.
This is a big turning event in the insurance industry. I explained in detail about this change in my earlier post at “Term Insurance-Claim Settlement Ratio no more a big criteria“.
So now how to choose the “Best Online Term Insurance”? It is pretty simple. No complication at all. Below I will share you how to short list.
1) How old is your insurance company?
Life Insurance is a long-term contract (especially term insurance). Hence, I will select the insurance company, which has been in this industry for more than 10 years. Why 10 years only? I feel comfortable with this number. Because privatization in insurance industry was done in the year of 2000. It means almost 15 years back. Hence, I look for a company which is at least 10 years old. I may be biased. However, this gives me some confidence on insurance company’s business existence.
I agree that we can’t predict the future. However, at the same time, we must look at history to predict our future. Here is the list of all insurance companies and how old they are.
Note-There may be an error of margin of around a year. Because some companies mentioned the IRDA approval as their start and some the actual start year.
From this activity, we noticed that around 12 companies are more than 10 years old. The rest of them are either 10 years or less than 10 years. Therefore, even though these new companies may be offering “Best Online Term Insurance” plans, but for my safety, I will stick to old companies.
2) Claim Settlement Ratio–
As I said above, claim settlement ratio is not a big priority now for the selection of insurance. However, it will give me an indication of how the company is aggressive about claim settlement. However, I again warn you that this is a raw data. It will not differentiate the claims based on products. You will not see how the LIC or some other companies settled endowment plans, term insurance plans, or ULIPs. However, you may feel some comfort and a tool to judge the insurance company. But not a sole criterion to judge. Below is the claim settlement ratio of all life insurance companies for the year 2014-15. I wrote a detailed post on the same at “IRDA Claim Settlement Ratio 2014-15-Which is best Life Insurance Company?“.
You notice from the above data that the companies which have more than 90% claim settlement ratio are around 9. I highlighted them with green. However, I highlighted Star Union Life with red even though it’s claim settlement ratio is showing at an impressive 94 %. Because it was a 7-year-old company. Hence, I feel a bit uncomfortable to go with.
Now we shortlisted the seven companies.
3) Cost of Term Insurance–
Now we have to list down all these seven companies premium rates to arrive at cheapest and affordable. Here is the list of premium calculated.
You noticed that LIC is the costliest one among all. At the same time, Kotak is offering the lowest premium. However, do remember that the above premiums may change based on your health condition or some other factors.
Note-I considered typical pure term plans. I have not considered any riders, benefit payout options or so.
- I considered typical pure term plans. I have not considered any riders, benefit payout options or so.
- The term I selected is 30 years. However, I suggest you to consider the time of insurance up to your working life. Life Insurance is not required during retirement.
- Never buy combo products, which offer riders or some death benefit payout options.
- Each of these facilities is not offered to you freely. They charge it for such offers. Hence, buy it only when you feel the features suit you.
- Buy accidental insurance separately from general insurance companies.
- Buy critical illness insurance separately from general insurance companies only if you have a family history of such diseases.
4) Plan features–
Let us go further and try to shortlist the plan which suits you. This time, we will look into the term of the plan. The minimum term and maximum term.
Finally, you notice that some of the best options like maximum age, maximum term and premium paying flexibility features are with ICICI Pru iProtect Smart, HDFC Life Click 2 Protect Plus, Kotak Preferred eTerm Plan and SBI Life eShield.
Please note that I am not against LIC or other companies. However, considering choices, features, flexibility, premium budget, and reliability, I chose below 5 term insurance plans as my choices of “Best Online Term Insurance”.
- LIC eTerm-Costliest but to those who feel that LIC is Government backed and safe.
- ICICI Pru iProtect Smart-Best with competitive price and features.
- HDFC Life Click 2 Protect Plus-Third Choice.
- Kotak Preferred eTerm Plan-Fourth Choice.
- SBI Life eShield-Final Choice.
You may feel biased. However, considering the factors, I feel these are “Best Online Term Insurance” plans to go. At the same time, I am not stating that my method of choosing is BEST. However, I tried my best to shortlist the products. Others may have a different opinion. Hence, chose the one which you personally feel comfort.
Note-We are not associated with any Life Insurance Companies to promote their products. There are no monetary benefits from any of the life insurance companies. It is purely an initiative to promote term insurance and make the process of choosing simple.