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Top 5 best term insurance plans in India 2019

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Looking for the top 5 best term insurance plans in India in the year 2019?

This detailed blog post lays down a framework to evaluate all 24 insurance companies offering term plans in India right now, and selects the top 5 best companies out of these 24.

But first, let’s understand what is term life insurance and why you should buy an online term plan?

1. What is term life insurance?

Term life insurance, popularly known as the term plan, is the simplest form of life insurance available in India.

It’s a pure risk mitigation tool with no component of investment attached to it.

You pay a premium to the insurance company for a pre-defined time duration.

If something happens to you, your survivors will be paid the sum assured as defined in the policy contract.

But if you survive this term, the policy just expires without paying you anything back.

In short, term life insurance works very much like a vehicle insurance – your survivors are paid for their financial loss (i.e. your death) . But if no financial loss happens, the policy just expires.

Since this is pure risk protection with no complexity involved (in terms of asset management), these policies come at a considerable lower premium vis a vis the sum assured.

 

2. What’s online term insurance?

Term insurance is a pretty straight forward contract which is easy to understand.

Companies have now realized that it makes sense to sell such plans online since the complexity in selling is not too much.

That also means that companies can cut down the middlemen (i.e. the agent) and save on the costs.

A part of these savings is passed on to the end consumer in form of even lower premiums.

Plus, when you buy online, you get convenience of buying the policy at your comfort and without too much pressure from a salesman.

In all, it makes perfect sense to buy an online term life insurance.

 

3. Selecting the Top 5 Best Online Term Insurance Companies in India 2019

While there can be multiple ways to evaluate the best online term insurance companies in 2019, I have used the following methodology to filter out companies that:-

  • offer a high predictability of paying the sum assured
  • are stable
  • don’t keep you waiting for settlement
  • and finally, are competitively priced

Towards, that I have analysed the following numbers for all the 24 insurance companies:-

a. Claim Settlement Ratio (CSR)

CSR is the most important criteria when selecting a life insurance company.

CSR is defined as the number of claims settled by the life insurance company as a percentage of total claims received in a financial year.

A higher number indicates that the company settled a large number of claims.

It gives a broad sense of the reliability of the insurance company and the probability that your insurance claim will be settled.

Please note that CSR is at company level, not at life insurance product level.

In my study, I have shortlisted the companies with a CSR higher than 95%. The following 11 companies qualify on this criteria out of the available 24.

CSR Ratio of major Life insurance companies in India

b. Solvency ratio of companies

When you go for a life insurance company, you would prefer to have a company that is financially stable.

Solvency ratio helps us identify those companies.

It is defined as the ratio of assets to outstanding liabilities.

Assets include the money pool that the company has, liabilities include the sum assured that the company may have to pay in an year.

As per IRDAI, all life insurance companies need to maintain a minimum solvency ratio of 1.5.

Solvency ratio of best life insurance companies in india 2017-18

c. Premium Payable

Next, I have calculated the premium for the companies with good CSR.

The premium calculation considers a 30 years old non-smoker male looking for a cover of 1 crore till his age of 65 years, with no riders attached to the policy.

I have left out few companies (like Bharti AXA, Exide, Edelweiss Life etc.) purely because I am more comfortable with better known brands like ICICI, HDFC, SBI and the likes.

Premium amount for top life insurance companies in india 2019

Given the results, I will also move out LIC out of my consideration list (due to very high premium).

Based on the above research, I would recommend the following as the Top 5 Best Life Insurance companies in India for year 2019 (in order of amount of premium)

  • Aegon Life iTerm Insurance Plan
  • ICICI Prudential iProtect Smart
  • SBI Life eShield
  • HDFC Standard Life Click 2 Protect Plan
  • MaxLife Online Term Plan Plus

 

4. Top 5 Best Online Term Plans in India 2019

i. Aegon Life iTerm Insurance Plan

CSR : 95.67%

Premium Amount: Rs. 7,970 (lowest amongst all)

Claims pending for more than 3 months: 0

Plan specificationsAegon iTerm online insurance plan

  • Minimum age of entry: 18 years
  • Maximum age of entry: 65 years
  • Minimum term duration: 5 years
  • Maximum term duration: 62 years
  • Maximum policy maturity age: 100 years
  • Minimum sum assured: 25 lakhs
  • Maximum sum assured: No limit but subject to underwriting
  • Accidental death benefit rider availability: Yes

 

ii. ICICI Prudential iProtect Smart

CSR : 97.88%

Premium Amount: Rs. 9,363

Claims pending for more than 3 months: 7

Plan specificationsIcici Pru iprotect smart life cover plan

  • Minimum age of entry: 18 years
  • Maximum age of entry: 65 years
  • Minimum term duration: 5 years
  • Maximum term duration: 85 minus your age
  • Maximum policy maturity age: 75 years
  • Minimum sum assured: Not defined
  • Maximum sum assured: No limit but subject to underwriting
  • Accidental death benefit rider availability: Yes

 

iii. SBI Life eShield

CSR : 96.76%

Premium Amount: Rs. 10,950

Claims pending for more than 3 months: 19

Plan specificationsSBI life eshield term insurance plan

  • Minimum age of entry: 18 years
  • Maximum age of entry: 65 years
  • Minimum term duration: 5 years
  • Maximum term duration: 30 years
  • Maximum policy maturity age: 70 years
  • Minimum sum assured: 20 lakhs
  • Maximum sum assured: No limit but subject to underwriting
  • Accidental death benefit rider availability: Yes

 

iv. HDFC Standard Life Click 2 Protect Plan

CSR : 97.80%

Premium Amount: Rs. 11,678

Claims pending for more than 3 months: 9

Plan specificationsHDFC Click2protect plus term insurance plan

  • Minimum age of entry: 18 years
  • Maximum age of entry: 65 years
  • Minimum term duration: 5 years
  • Maximum term duration: 40 years
  • Maximum policy maturity age: 75 years
  • Minimum sum assured: 10 lakhs
  • Maximum sum assured: No limit but subject to underwriting
  • Accidental death benefit rider availability: Yes

 

v. MaxLife Online Term Plan Plus

CSR : 98.26%

Premium Amount: Rs. 12,272

Claims pending for more than 3 months: 0

Plan specificationsMaxlife onlien term plans

  • Minimum age of entry: 18 years
  • Maximum age of entry: 60 years
  • Minimum term duration: 10 years
  • Maximum term duration: 35 years
  • Maximum policy maturity age: 70 years
  • Minimum sum assured: 25 lakhs
  • Maximum sum assured: 100 crores
  • Accidental death benefit rider availability: Yes

 

5. Important points to consider before you buy term insurance plan

i. Identify the right coverage

Standard rule of the thumb is to go for a sum assured that is 10-15 times your annual income.

However, that’s not a great suggestion.

Just put in a little effort and you can actually come up with a better number.

But do remember that this is just a starting number for today. You should actually review your life insurance coverage need every 10 years and buy additional insurance, if required.

Here’s a detailed post to understand the amount of life insurance coverage you actually need.

 

ii. Zero in on the policy term duration

Companies these days are offering term insurance till the age of 100 years.

Don’t fall for that.

Remember that you are buying term life insurance to cover the financial risk of your life.

The risk that your family may have to suffer financial setbacks in case you die before your financial goals are achieved.

Take an educated guess on this time frame.

For example, as per World Bank, the average life span of an Indian male is 68 years.

By this age, your children would be independent and well settled. You would have retired and accumulated enough assets to take care of yourself and your spouse.

If the above-mentioned conditions are true, then why do you need risk mitigation till 100 years and pay some extra money to the company.

It’s better to take a policy till your age of 70 years.

iii. Identify the policy riders you need

If you ask me, I would suggest you to go for accidental death benefit rider only.

This rider increases the sum assured in case of an accidental death.

Apart from this, I don’t think you need other riders like waiver of premium or critical illness.

Instead, buy a higher cover for your health insurance.

 

iv. Opt for annual premium payment option

Companies are getting innovative these days.

They will give you discounts if you pay a single premium or complete the premium payment in say 5 years.

That way, they are ensuring that you pay as fast as possible for the risk you add to the company.

I would suggest you to opt for annual premium payments.

 

v. Always undergo a medical test

Even if given an option to skip a medical test, don’t opt for it.

Insurance is a contract done in good faith. That means the contract assumes you have disclosed all the material facts correctly (that includes the facts around your health as well).

In case a claim comes for a policy where no medical test was conducted, the insurance company will have ample reasons to deny a claim on the grounds that you didn’t disclose the medical condition at time of buying the policy.

 

Conclusion

Insurance is a highly regulated business and IRDAI is doing a great job to frame customer friendly policies.

While most of the people still stick to LIC due to its governmental parentage, I would say that times have changed now.

Private players are offering better term insurance plans at much lower rates, improved settlement ratios and higher customer service quality.

Don’t delay the decision to buy a term insurance.

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Tushar Jain

Tushar Jain

Tushar Jain is a personal finance enthusiast who loves to talk about money, savings, investments and spending. He blogs about financial wisdom and income growth habits at this blog jaintushar.com. Contact him to say Hi.

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