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”?
Note-I published the list of best online term insurance plans in India for 2017 at “Top 5 Best Online Term Insurance Plans in India in 2017“.
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.
IRDA Claim Settlement Ratio 2014-15-Which is best Life Insurance Company?
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.
View Comments (459)
Hi Basu,
Have you written any article on the same for 2017 ?? like, "Top 5 Best Online Term Insurance Plans in India for 2017"
I am going to start term insurance. So can I follow this same post or wait for your 2017 analyze ?
Avik-Refer the same at "Top 5 Best Online Term Insurance Plans in India in 2017".
sir
pure term insurance did not cover death due to accident . Is it cover death due to health problem like heart attack. Should not we go with accidental cover instead of term insurncae as their is more risk of accidental death .
Maninder-Who said that death due to accident not covered in term insurance?
Sir, I check various term insurance plans ,their are various options like "accidental death benefit rider" , i think i understand it wrongly. If term insurance covers accidental death then accidental cover is for cover disabilities due to accident ?
If i am wrong then please tell ( in short) what should we target to cover in term insurance plan( as u say pure term insurance) and accidental insurance.
thanks
one other query - is term insurnaces covers death due to health problem like heart attack.
Maninder-A typical normal term life insurance also covers the death due to the accident. However, by buying an accidental rider, you will get more benefits in case of death or disability (which you can easily buy it from general insurer than clubbing with life insurance). Yes, death due to heart attack is covered in term insurance if there were no such health complication during buying or insurer aware of the risk while issuing the policy. Death due to diseases at later stage due to any health reasons is very much covered in term insurance.
Dear Basu,
I always like your analysis and advise (nice graphical way of plotting data which helps arrive at a perspective quickly).
I Need your advice. I am currently subscribed to ICICI prulife Pure Protect - Elite from 2012 Jan. It is expensive compared to other policies in the market and ICICI seems to have ismart now which seems to have more RoI now.
Please help me with your expert advice on the following:
1. Is there any advantage on the length of subscription to a policy?
2. Do insurance companies provide a way to switch from one plan to other like insurance portability?
Looking forward,
Regards,
Venkata
Venkata-1) It seems offline term insurance. Hence, it is costly. Hence, better you check online alternatives. Once you got the new policy, then you go for cancellation of the existing one.
2) NO.
Hi
I just wanted to know if there is any effect of GST bill on term insurance. I mean if GST bill is implemented, then will there be any reduction in premium.
Srinivas-Let them implement the bill.
Sir, I want to do LIC e-Term policy. I rarely smoke .. i think 10 times during last year. Last time i smoke about 20 days ago. Now, If I apply for Non-smoker category and after medical test if I fail smoking test-- What will happen?? Will they refund me the amount I paid or increase the premium to aggregate category?
Saurav-If they consider you in smoking category, then either they reject the proposal or hike the premium (even reduce the sum assured you proposed). If you not accept their proposal, then you have rights to reject it. Once you disagree, then they return the premium by deducting the medical examination cost and the tax on your premium.
Hello Sir,
If applicant dies after making online payment of premium & Medical examination is done but before policy paper gets issued & policy comes in force to applicant then premium paid will be refunded back to nominee on claim or not?
I checked this with Max Life Insurance & I have been informed by their call center executive that in such case premium will not be refunded back to nominee if applicant dies before policy issued.. Even he stressed that no other insurance company will refund back premium paid in such case & I can check with any Insurance provided !!
It was very surprising to know.. Please advice what is IRDA guidelines in this regard!!
Sachin-If policy is not issued and premium is accepted, then death occurs means they have to return the premium. If they NOT, then it meant that they accepted the proposal and they have to pay the SUM ASSURED. Don't rely on these call center guys. Visit their branch and check personally.
Thnx for ur reply ...
I also felt the same, but one never know about hidden T&C of these companies & when incident occurs, then you have no choice without accepting if it is mentioned so !!
I was about to finalize Max Life Term Plan, but now I am bit apprehensive about my decision. It becomes tough when you come across such incidents.
Kindly advice shall I go for Max Life or go for my next shortlisted options ( Kotak & ICICI ) ??
Sachin-If you are so apprehensive that accident may happen during this exluding period, then avoid it :) Brother, please be positive. If you feel that it is a biggest negativity of that feature. Then simply switch to other insurer.
Hi Basavaraj,
Does LIC's Amulya Jeevan cover death by accident?
Does LIC's Term Assurance Rider- cover death by accident?
HDFC Click2protect Plus has an "Extra Life Option" which covers death by accident; doubles your SA- and your Premium on it increases by 3K Mark roughly. And would you call this as a Rider?
I still would want to add on a Personal Accident Rider from GI companies after shortlisting- as I digged a little to find out why you stress on Riders from GI Co's and I understood its mainly due to variations in coverage. Thanks for that.
Karan-Yes Amulya Jeevan and Term Assurance Rider covers death. HDFC's option is accidental rider.
Thanks Basu. So what I understand is that LIC Amulya Jeevan covers Death- Both natural and Accidental. Am I Right?
Karan-Not only LIC Amulya Jeevan but all insurers covers whether the death is natural or accidental. But only when you opt for rider, the rider benefit in case of accidental death will be added to claim amount.
Hello Sir,
I have Jeevan Anand and Whole Life Policy Limited Period each of Rs 5 Lac sum assured for 21 yrs premium paying term. i have paid 6 premium till date.
would like to know is it good to surrender and buy 1 term insurance as for above 2 policy my premium is Rs 42K. where as for same premium amount i will get Rs 2 Cr cover.
Also suggest me should i go for Surrender and take money back or keep it for paid up capital value.
thanks,
arun
Arun-Go ahead for surrender.
Hi,
I have processed term insurance with Max Life Insurance. I checked the above comparison and found that Max is fulfilling all the above criteria but still its not in your top 5 list. Any specific reason for not including it?
Abhishek-Check earlier comments. I already replied the same.
Dear friend, i already have (30 lac) term insurance i Aviva i life. now i want to take additionally 20 lac term plan for other Insurance company. is it possible. give me a suggestion.
Gnanasekaran-Why can't you buy with same insurer?