Which are the online Top 5 Best Term Insurance Plans in India 2018? What is the claim settlement ratio of these best term insurance plans? Let us choose the best term insurance plans in India by comparison with charts.
We have around 24 Life Insurance Companies and as of now, all insurance companies offer online term insurance plans. Hence, it is hard to shortlist the BEST among them. This post will help you in shortlisting the Top 5 Best Term Insurance Plans in India 2018.
What is Term Life Insurance?
Term Insurance is the type of Life Insurance. If death occurs of the policyholder during the policy period, then his/her nominee will receive the Sum Assured selected. If policyholder survives till the end of the policy period, then he/she will not receive any maturity amount.
This is the reason, these policies cost you very less and cover a large amount of life risk. This is the PURE LIFE INSURANCE. Hence, anyone who has financial dependents must buy this product immediately.
However, nowadays there are so many variants in Term Life Insurance. For example, the return of premium, Term Life Insurance up to 100 years of age, a variety of riders and variety of claim payable option.
But instead of complicating your dependents, buy a simple plain term life insurance. Why you complicate your dependents when you are buying this is that this product’s benefit will come into picture when you are not here.
What are the advantages of online Term Insurance Plans?
Nowadays all Life Insurance companies offer you online term insurance plans. The advantages of online term plans are as below.
# It is convenient to buy as with the click of a button you can buy it.
# As there will not be any middlemen involved, the price is cheap than offline term insurance plans.
# You fill the proposal form on your own. Hence, an error of margin is LESS.
# Undue influence by agents is not there.
# Along with the discount of DIRECT purchase, if you buy through online then now life insurance companies will give you 8% on your FIRST YEAR PREMIUM. This is to promote cashless online transactions.
Top 5 Best Term Insurance Plans in India 2018
Now let us shortlist the Top 5 Best Term Insurance Plans in India 2018. How I selected the Top 5 Best Term Insurance Plans in India 2018?
# How old are the companies
# Claim Settlement Ratio
# Premium Cost
# Plan Features.
How old are our Life Insurance Companies?
Below is the chart which explains the age of all life insurance companies. I am comfortable with the company which is at least 10 years old.
You notice that among 24 Life Insurance Companies, only 17 companies completed 10 years or more. Therefore, my target is among these 17 companies only.
The reason behind this criteria is that Life Insurance is a long-term contract between you and insurance company. Hence, the older the company the more comfortable I feel.
IRDA Claim Settlement Ratio for 2016-17
I have already written a detailed post on this at “IRDA Claim Settlement Ratio 2016-17 | Best Life Insurance Company in 2018“.
However, for the better understanding purpose, I am putting the data again in this post.
You notice that among total 24 Life Insurance Companies, around 8 companies are in GREEN (Claim Settlement Ratio above 95%). Total 11 companies are in YELLOW (Claim Settlement ratio between 90% to 95%). Total 5 companies are in RED (Claim Settlement Ratio below 90%).
As usual, LIC tops the list. But don’t feel happy. Let us see the claim amount settled by individual companies to arrive at best companies.
Average Claim Settlement Amount of Life Insurance Companies in 2016-17
As I said above, the claim settlement ratio will not give you the clear picture about which type of products the insurance companies settled. However, we can assume the types of products they settled by looking at the average claim settlement amount of Life Insurance Companies in 2016-17.
Here come the results !! LIC stands in lowest with red in colour along with Life Insurance Companies like Sahara, Reliance Life, Exide and Future Generali. What is it indicating?
It shows that, even though LIC settled the highest number of claims, the majority of such claims are less than Rs.2,00,000 Sum Assured. Hence, it is indicating indirectly that LIC’s claim settlement is mainly in the category of Endowment Plans but not Term Insurance.
Hence, the moral of the story is that DON”T RELY TOO MUCH ON CLAIM SETTLEMENT RATIO ALONE!!
Premium Cost of Term Insurance Plans
Now I will consider these 5 Life Insurance Companies premium only to arrive at best. The Insurance Companies which I shortlisted are as below
- LIC (Why? Because the oldest and Government backed mammoth)
- Max Life
- Aegon Life (Why even though it is less than 10 years-Because of its claim settlement ratio and average claim amount it settled).
Last year I recommended SBI Life’s Term Life Insurance. However, this time I excluded that by including Aegon Life.
Now I will consider an example of a person whose age is 30 years, Term of Plan as 30 years, Non-Smoker and healthy, Sum Assured Rs.1 Cr and yearly premium payment. I selected plain vanilla product without any riders or add-on features.
Now let us look at the plan features and decide which are the Top 5 Best Term Insurance Plans in India 2018.
Few points to consider while buying term insurance
# Never rely on Claim Settlement Ratio
Claim Settlement Ratio is raw data. This data will not give you enough picture of what type of products the insurance companies settled. Hence, relying too much on this single data and selecting a product is not a good idea.
# Quantum of Life Cover
Ideally one must have at least 15-20 times of your yearly income. This is the basic calculation.
# Fill the data properly
Sharing data especially materialistic information must be accurate. If you are unable to understand anything, then immediately contact Life Insurer for the help. Understand the questions and fill only when you know what you are filling.
# Never allow someone to take over your decision
Never budge on the decision which is against your wish. If you are fully comfortable, then only go ahead and buy.
# Term of the policy
Ideally, it should be up to your retirement age. Because you retire when you are financially free. Hence, Life Insurance is not required during your retirement age.
# Splitting of Term Insurance
There are few who are apprehensive of relying on a single insurer. Hence, they try to split among few. But in reality, there is no logic in splitting. What is the guarantee that the all insurer will accept or reject the claim?
# Stay away from riders
Never combine Life Insurance with General Insurance requirement. You will get better-featured covers from general insurers regarding accidental and critical illness covers. Hence, simply avoid riders.
# Never heed the aggregators choice
Nowadays there are so many online aggregators. You may not know that they act exactly like insurance agents. Hence, never rely on their claim. Do your own research. If you are satisfied, then only go ahead and buy. Refer my post about the same “Beware of Insurance Comparison portals in India“.
# Know about Sec.45 of Insurance Act
After the recent clarification about Sec.45 of Insurance Act, the customer became king. It states “No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.”
Refer the complete post at “Term Insurance-Claim Settlement Ratio no more a big criteria“.
# Review your life insurance cover
Buying Life Insurance of Rs.1 Cr or Rs.3 Cr is not a one-time affair. You must review your life insurance requirement at least once in the 5 years. If required, then you must increase the sum assured.
# Be cautious with premium payment
In case of term insurance, you have to be very cautious when it comes to premium payment. It is always better to opt for yearly premium payment and also if possible make it automated by the way of ECS. If policy lapses due to your negligence, then you have to undergo medical tests and all kinds of stuff once again. If there are any health issues, then the insurer may reject to renew the policy.
# Never go for Telemedical Examination
Recently one of my blog readers pointed that few Life Insurance companies insisting just Telemedical Examination by questioning about your health details in the phone (Refer-Can I buy Term Life Insurance with Telemedical Verification?).
It may be the easiest process for you and for life insurance companies. However, I feel suspicious of such kind of medical examination. Because in future insurance companies may find 100000 reasons to reject the claim on health ground.
Instead, I suggest you to go for medical examination. This will really clear the dust or doubt in your mind about future claim settlement.
Final Note:-The list of “Top 5 Best Term Insurance Plans in India 2018” is my personal choice and comfort with insurance companies and by verifying features. However, it does not mean that my selection will be the UNIVERSAL selection.
Hence, if you have a different opinion from my selection, then it does not mean you are buying a wrong product. My only concern here is not to shortlist “Top 5 Best Term Insurance Plans in India 2018”, but to give the gyaan which you must take into consideration before you shortlist your term life insurance.