A Term Insurance plan is the best form of life insurance compared to endowment plans or ULIPs, as you can get a high cover for a low price. This is because the entire premium you pay goes towards covering the risk and there is no investment component. Buying sufficient term insurance cover is of utmost importance and should be done as a priority task while planning your finances.
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A term cover essentially seeks to compensate for the loss in income in case of death of the insured. Usually pure term cover is not issued to non working people. However, if your spouse is also earning, it is recommended to take a term cover in both your name as well as for your spouse.
Parameters to be considered when purchasing a term policy:
Quantum of cover: The life insurance you take in your name should be sufficient to take care of regular expenses of your family in your absence in addition to taking care of important liabilities and goals for your family. Remember to take into account the inflation factor. Some plans give you an option to increase or decrease the Sum Assured amount based on your needs, which can be quite beneficial. Consider your spouse’s income if any, your liabilities, your dependents and critical financial goals before you decide on the amount of cover you need. You can estimate the life insurance corpus you need by using the Life Insurance Planning Calculator.
Time period and Age of Insured: Generally, you must have insurance till the time you intend to work. It doesn’t make sense to take a policy only for 10-20 years, till you are in your 40s, as those are relatively non-risky years. Insurance companies offer plans for fixed terms of maximum 30 years in most cases. Some plans offer higher terms of 35 and 40 years as well. Companies also specify the maximum age of the insured at the policy expiry, which is generally 70 years. Some companies like Aegon Religare, HDFC Life and ICICI Prudential specify this as 75 years. Higher this age, the better for the insured.
Premium payment term and modes: Companies offer flexible premium payment modes of yearly, half-yearly, quarterly or monthly. In comparison to a yearly payment option, a half-yearly payment option will work out slightly more expensive. For example, for policies by Bharti AXA and DLF Pramerica, half-yearly premiums are 0.52 times the annual premium. Most companies also offer a single payment option. However, this means, your premiums are front loaded, and in case of an early death, the premium for the remaining term goes waste.
Claim Settlement Ratio: This is by far the most important aspect to be considered. Claim Settlement Ratio gives an idea of the past claims settled by the company in relation to the total claims received. Companies like LIC, HDFC Life, ICICI Pru Life, SBI Life, Bajaj Allianz and Kotak Life have high ratios, while DHFL Pramerica, Edelweiss Tokio and Future Generali are among those with lower settlement ratios. Choose a policy with a high settlement ratio. Please note that the settlement ratios given are at the company level and not at the individual plan level.
Which policy should you buy and which should be avoided?
We have analysed pure term insurance policies of 14 companies on the basis of the different parameters. Of the companies analysed, you can consider ICICI Pru Life’s iCare II or iProtect and HDFC Life’s Click 2 Protect Plus policies on the back of low premiums and high settlement ratios. Of these two, HDFC Life’s policy is cheaper. Readers are advised to call the customer call center for more details of the differences in the policies offered by ICICI at the time of purchasing the policy.
Other policies which can be considered on the back of high settlement ratios are Bajaj Allianz and Kotak Life Insurance. You can also consider Aviva Life and Bharti Axa for low premium, although the settlement ratio is not very high. LIC has the highest settlement ratio at 98%. Many people also prefer LIC due to the brand name and the history associated with it. However, this plan is by far the costliest among the policies we have compared.
Plans by Aegon Religare, Birla Sun Life, DHFL Pramerica, Edelweiss Tokio, Future Generali, Reliance Life Insurance and SBI Life can be avoided either due to high premiums or low settlement ratios.
Have you bought your term policy yet?
Most of us plan, plan and plan, but fail to execute the plan. The importance of a term plan cannot be emphasized more, as your family’s needs hold paramount importance in your absence. So have you taken care of this yet? If not, this should be one of the first things you need to do on your ‘To-Do’ list. Open your laptop now to purchase your term policy or call your insurance advisor to help you purchase your term plan.
Please note that we have only considered certain products offered by insurers. The above insurers may have similar or other plans which fall under the ‘pure term plan’ category. A detailed comparison of the different products analysed is available below. If you prefer to download the excel file, please click here. For more details, refer to individual company’s prospectus. Kindly note that this analysis covers offerings from major insurers only & this is not an all-product comprehensive comparison. The current analysis may include additional products or may exclude products from our earlier analysis based on availability of information. The analysis is valid on the date being published.
A term plan is the simplest and most straight forward form of insurance. However, insurance companies go through different parameters before deciding if you are eligible to purchase the policy or not. Assessing your medical fitness is one of the basic things done before the policy is given to you. Sometimes, a past medical condition, even if it is a decade old can be a cause for refusing the policy to you. Sometimes, you may be working in a country which is considered to be risky by the insurance company, and hence the policy may be refused. In such cases, you can seek the help of an insurance advisor or insurance brokers such as Medimanage or Policy Bazar to help you out.
The popularity of term plans has increased in the recent past, with online channels also gaining importance. Buying an online term plan is not only easy, but can also work out to be cheaper. If you purchase a term plan online, you need to fill in your details, make the premium payment and upload your documents. You will then be asked to do your medical tests. The policy will be issued subject to satisfactory documents and medical test results.
What are the documents needed to purchase a term cover?
Generally insurance companies require an ID proof, address proof, salary slip or IT returns, passport size photographs, cancelled cheque and cheque for the premium amount. The requirement for the documents changes on a case to case basis. If you purchase an online term plan, you can also upload these documents online and make an online payment for the premium.
Insurance Demat – Should you opt for this?
In 2013, IRDA introduced the concept of online insurance policies, where all your policies can be maintained in the demat form. An e-insurance account will need to be opened, and these details should be furnished when you buy a new policy. Insurance demat will not only save time and efforts, but is also a safer option to manage your policies. To know more about the insurance demat, please click here. It is recommended to opt for digitisation of insurance policies.
What are life insurance policies under the Married Women’s Property Act?
Life insurance policies taken under The Married Women’s Property Act or the MWPA can protect your wife and/or children in case of your death, wherein the proceeds of the policy will be used for the intended beneficiaries only and not for anyone else. If you are a businessman, then it is highly recommended to take your insurance policy under the MWPA. To read more about this, please click here.
Company |
Name of the Policy |
Sum Assured (SA) – Rs. In Lakhs |
Policy Durarion |
Aegon Religare
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iTerm
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Minimum : Rs. 10 lakhs
Maximum : No limit |
Minimum: 5 years, Maximum:40 years (up to the age of 75)
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Aviva Life
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iLife
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Minimum : Rs. 25 lakhs
Maximum : No limit |
Minimum: 10 years, Maximum:35 years
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Bajaj Allianz
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iSecure
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Rs. 2.5 lakhs – minimum for general category and Rs. 20 lakhs – minimum for categories split (as Smoker and Non-smoker);
Maximum SA – no limit |
10,15,20,25 & 30 years
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Bharti AXA
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Life eProtect
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Minimum Rs. 25 lakhs
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10, 15, 20, 25, 30, To Age 60, To Age 65, To Age 70 and To Age 75 years.
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Birla Sun Life Insurance
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Protector Plus Plan
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Minimum: Rs. 30 lakhs
Maximum: No limit |
Minimum: 5 years; Maximum: 30 years (subject to maximum age at maturity being 70)
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DHFL Pramerica
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Uprotect
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Minimum: Rs. 25 lakhs
Maximum: No limit |
Minimum: 10 years; Maximum: 30 years
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Edelweiss Tokio
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MyLife+
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Minimum: Rs. 25 lakhs
Maximum: No limit |
Minimum: 10 years; Maximum: 40 years and 80 minus entry age.
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Future Generali
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Care Plus
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Classic Option: Minimum: Rs. 10 lakhs; Maximum: Rs. 24.99 lakhs
Premier Option: Minimum: Rs. 25 lakhs; Maximum: No limit |
Minimum: 5 years; Maximum: 30 years
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HDFC Life
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Click 2 Protect Plus
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Minimum: Rs. 25 lakhs
Maximum: No limit |
Minimum: 10 years; Maximum: 40 years
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ICICI Pru Life
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iCare II / iProtect
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Minimum: Depends on age and policy term
Maximum: No limit |
iCare II: Regular Pay: 5 – 30 years; Single Pay: 5/10 years
iProtect: Minimum: 10 years; Maximum: 30 years |
Kotak Life Insurance
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Preferred e-Term Plan
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Minimum: Rs. 25 lakhs
Maximum: No limit |
Minimum: 10 years; Maximum: 40 years
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LIC
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eTerm Plan
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Minimum: Rs. 25 lakhs for aggregate; Rs. 50 lakhs for non smoker
Maximum: No limit |
Minimum: 10 years; Maximum: 35 years
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Reliance Life Insurance
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Online Term Plan
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Minimum: Rs. 25 lakhs
Maximum: No limit |
Minimum: 10 years; Maximum: 35 years
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SBI Life
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Smart Shield
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Minimum: Rs. 25 lakhs
Maximum: No limit |
Minimum: 5 years; Maximum: 30 years (equal to outstanding loan term for Decreasing Term Assurance (Loan Protection) Plan)
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Company |
Annual premium for Rs. 1 crore SA for a 30 year old Male, Non-Tobacco user for a 30 year policy duration (inclusive of tax) |
Minimum age at entry |
Maximum age at entry |
Aegon Religare
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Rs. 8,359 (Used calculator on site
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18 years
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65 years
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Aviva Life
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Rs. 7,368
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18 years
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55 years
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Bajaj Allianz
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Rs. 10,465 after a high sum assured rebate of Rs.5,635 – (30 year old male smoker for a 20 year policy
|
18 years
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60 years
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Bharti AXA
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Rs. 8,359
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18 years
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Depends on the policy term; 39 years for a 30 year policy term; 65 years for a 10 year policy term.
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Birla Sun Life Insurance
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Rs. 16,430.75 (for Level Term Insurance Plan)
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18 years
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65 years
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DHFL Pramerica
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Rs. 15,343
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18 years
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55 years
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Edelweiss Tokio
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Rs. 8,244
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18 years
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60 years
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Future Generali
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Rs. 19,089
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18 years
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60 years
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HDFC Life
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Rs. 10,332
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18 years
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65 years
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ICICI Pru Life
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Rs. 16,908 (for iCareII plan
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iCareII- 18 years
iProtect – 20 years |
iCareII- 60 years
iProtect – 65 years |
Kotak Life Insurance
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Rs. 8,444
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18 years
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65 years
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LIC
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Rs. 16,717
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18 years
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60 years
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Reliance Life Insurance
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Rs. 7,459
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18 years
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55 years
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SBI Life
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Rs. 19,234
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18 years
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60 years
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Company |
Maximum Age at Policy Expiry |
Premium Payment Modes |
Benefits other than Death Benefit |
Aegon Religare
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75 years
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Annual & One Time
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Accident Rider and 4 types of Critical Illness riders can be opted for; 25% advance payment on diagnosis of Terminal Illness; Payout of lump sum amount and Waiver of Premium on Critical Illness (only when Riders are purchased)
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Aviva Life
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70 years
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Annual & Semi Annual; Semi-annual Life insurance Premium = 0.51 times of Annual life insurance Premium
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Rebate on large sum assured; Rebate available for female applicants to the extent of 5%.
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Bajaj Allianz
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70 years
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Annual, Semi- Annual, Quarterly, Monthly
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Option to choose additional riders of Accidental Protection, Critical Illness and Hospital cash benefits, Premium rebates available in the form of High Sum Assured rebate (subject to policy limits) and Joint Life rebate (when a joint policy is taken) as there is an option to have a joint term insurance cover too.
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Bharti AXA
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75 years (also depends on policy term)
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Annual & Semi Annual; Semi-annual Life insurance Premium = 0.52 times of Annual life insurance Premium
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Claim settlement: within 48 hours of submission of all relevant documents. Reward for non-smokers opting for term insurance above Rs. 50,00,000. Variants of the policy provide regular income to the family members
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Birla Sun Life Insurance
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70 years
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Annual, Semi- Annual, Quarterly, Monthly
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Level Sum Assured or Increasing Sum Assured option can be chosen; Payout option can be lumpsum or staggered, depending on the needs; Accidental Death and Disability Rider, BSLI Critical Illness Rider, BSLI Surgical Care Rider, BSLI Hospital Care Rider and BSLI Waiver of Premium Rider can be opted for; Premium rebate for women
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DHFL Pramerica
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65 years
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Annual & Semi-Annual; Semi-annual Life insurance Premium = 0.52 times of Annual life insurance Premium
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Accident Rider and Critical Illness Rider can be opted for. Non smokers have benefits on premium to be paid. If the person commits suicide, within 12 months of policy commencement, 80% of the amount will be paid
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Edelweiss Tokio
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80 years
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Annual & One Time
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Discount available on choosing higher Sum Assured and for women above 22 years. Additional riders like waiver of premium, accidental death and accidental total and permanent disability can be chosen.
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Future Generali
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68 years
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Annual, Half yearly, monthly (only ECS option)
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Accident Rider can be opted
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HDFC Life
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75 years
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Annual, Half- yearly, quarterly or monthly and single premium
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Accidental Rider can be opted; Income Option can be taken (10% on death and 90% as monthly income over 15 years); Income Plus option can be opted (100% on death and in addition monthly income equal to 0.5% of SA over 10 years)
Policy cover can be increased on certain milestones like marriage and parenthood. Critical Illness Rider also available. |
ICICI Pru Life
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iCareII- 65 years
iProtect – 75 years |
Annual, Half- yearly, quarterly or monthly and single premium
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Accident Rider can be opted in option 2 of the plan equal to SA, subject to a max of Rs. 50 lakhs
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Kotak Life Insurance
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75 years
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Annual and Monthly
The following loading will be used to calculate the Premium. Yearly – 100% Monthly – 8.8% |
Recurring payout can be opted for on death; Waiver of premium possible in case of becoming permanently disabled; Preferential rates for female applicants; Riders can be opted for
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LIC
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75 years
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Annual
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NA
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Reliance Life Insurance
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75 years
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Annual
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Can add accidental death and total and permanent disability riders. Waiver of premium allowed for permanently disabled person who is insured. Discount for women in the premium.
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SBI Life
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65 years
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Annual, Half- yearly, quarterly or monthly and single premium – Premium payment mode depends on the type of policy chosen
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Availability of four plan options: (i) Level Term Assurance
ii) Increasing Term Assurance (iii) Decreasing Term Assurance (Loan Protection) (iv) Decreasing Term Assurance (Family Income Protection) Critical Illness Rider, Accidental Death Benefit Rider and Accidental Total and Permanent Disability Benefit Rider can be opted for; Special Rebates available for higher sum assured |
Company |
Claim Settlement Ratio for the Year 2014-15 (Individual Death Claims paid / Total Individual Death Claims) |
Comments |
Our Analysis |
Reference Links |
Aegon Religare
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89.78%
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Premium is among the lowest and there is a facility to choose additional riders; However, settlement ratio is not very high
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Can be avoided due to low claim settlement ratios, although premium is among the lowest
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Aviva Life
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83.07%
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Premium is low and policy term can be extended upto 35 years; However, maximum entry age is comparatively lower at 55 years
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Can be considered for low premium; Also, you can choose a high policy term of 35 years, but settlement ratio is not high
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Bajaj Allianz
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91.85%
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Even after applying High Sum Assured rebate, premium is highest among peers; However, this policy comes with different types of flexibilities
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Can be considered on the back of various flexibilities and premium is comparable after considering high sum assured rebate
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Bharti AXA
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80.90%
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Premium is among the lowest
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Can be considered for low premium
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Birla Sun Life Insurance
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95.30%
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Option available to increase SA over the policy term and many riders can be opted for; however, premium is on the higher side
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Can be avoided on the back of high premium; however, higher benefits available
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DHFL Pramerica
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57.19%
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Premium is high, maximum entry age is low and claim settlement ratio is low
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Can be avoided due to high premium and low settlement ratio
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Edelweiss Tokio
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57.14%
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Flexible premium paying options and discounts available for higher SA; Maximum age at policy expiry is also high, However claim settlement ratio is among the lowest
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Can be avoided due to low settlement ratio although premium is low
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Future Generali
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83.70%
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Premium is the highest among peers, with settlement ratios also being among the lowest
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Can be avoided due to low settlement ratio and high premium
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HDFC Life
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90.50%
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Premium is low and settlement ratio is among the highest; Also, you can opt for a high SA upto Rs. 10 crores
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Can be considered for low premium, high settlement ratios and high SA
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ICICI Pru Life
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93.80%
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High settlement ratio and high maximum entry age for iProtect. Suicide within 1 year of policy or policy reinstatement is not covered
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Can be considered for high settlement ratio
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Kotak Life Insurance
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90.73%
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Premium is among the lowest and comes with different benefits; settlement ratio is also high
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Can be considered for high settlement ratio and low premium
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LIC
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98.19%
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Premium is the highest among peers, but still a preferred option for many owing to brand name and highest settlement ratio. Differential premiums for smokers and non-smokers
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Can be considered for high settlement ratio and brand name; however, the premium is the highest among peers
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Reliance Life Insurance
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83.84%
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Premium is among the lowest; but settlement ratio is low and no additional benefit
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Can be avoided on the back of low settlement ratio and no additional benefits, however premium is among the lowest
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SBI Life
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89.43%
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There are options to increase or decrease SA according to family needs and also take riders; however premium is very high
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Can be avoided due to high premium; However, this plan has the flexibility of changing SA option
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Disclosure : Kindly note that Directors of the Company are currently associated with ICICI Prudential & HDFC Standard Life as Life Insurance Advisers. We value our integrity & we believe that what we have presented above is a genuine comparison, keeping your interest ahead of ours.
Smitha Hari
Team GettingYouRich.com
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