Insurance is derived from French word ensure which means to make something certain or safe. Ensureur in turn is driven from assureur. Insurance as financial products has been developed to provide safety against damage, loss or property or life for individuals, assets, businesses etc.
In this post, we will look at Best Term Insurance plans in India.You will get a comparative picture of best term insurance plans available in the market.
What is Life Insurance
Life insurance is a financial product created to protect against untimely loss of life. In a typical life insurance policy the insurance companies insurance specific money in case of premature death of insuree to beneficiaries nominated in the contract, subject to terms and conditions of the policy.
Top Term Life Plans for 2017
- Max Online Term Plan( Max life)
- iProtect( ICICI Prudential)
- Click 2 Protect( HDFC Life)
- iTerm plan (Aegon Religare)
- e-term plan( LIC)
- Preferred-eterm( Kotak Life)
- I-secure(bajaj allianz)
- e-shield (SBI Life)
Here are the details of each of these term plans
Details of top life insurance plans
Max online term Plan from Max life
Max online term plan comes with one of the lowest premiums and a fantastic settlement ratio of claims about 96 %.The annual premium for 30-year-old male non-smoker for basic life cover comes to around 8300.
Max online term plan comes in following 3 variants
- Basic Online term plan with Life cover
- Basic life cover with monthly income
- Basic Life cover with increasing monthly income
iProtect Smart from ICICI Prudential
iProtect is the flagship term insurance plan from ICICI prudential. iProtect smart is a pure play term plan with an Accidental death benefit rider as well as critical illness rider. iProtect also offers premium waiver in case of terminal insurance.
iProtect Smart plan offers 3 payout options:
- One time lump sum: You get the entire benefit at the time of death in one shot
- Ongoing Regular Income: In this option, you get 10 % benefit amount every year. The payments are made monthly, so if you are insured for 1 crore your beneficiary will get the sum in 120 monthly installments of Rs 83,333.
- Increasing ongoing Regular income: In this option, you get 10 % of the benefit every year but the benefit keeps on increasing by 10% every year.
iProtect Smart Plan Key benefits offered
- The accidental death benefit is available as a rider. In case of accidental death, beneficiary gets the total sum assured plus the sum you have opted for Accidental death benefit
- Critical illness benefit is available for 34 critical diseases. You get a lump sum payment irrespective of your expenses on the illness.
Click 2 Protect HDFC life
Click 2 Protect from HDFC life is one of the most popular term insurance plans in the market. HDFC has a great settlement ratio. Premium for 30-year male non-smoker for the basic plan comes to about.
iTerm Plan for Aegon Religare
Aegon Religare was the first to innovate on online term plans they have started improving their settlement metrics also. Like Kotak life term plan for Aegon Religare also they also provide maximum 40 years term for the plan
Like most other plans it also provides accidental death rider benefits and also permanent disability benefits wherein all your future installments will be waived off but the policy will continue to stand.Aegon Religare has one of the lowest premiums in the market.
e-Term plan from LIC
e-Term plan from LIC is its foray into online term plans. Even though LIC is a late entrant in the online term insurance market.It has steadily built up its presence with an e-Term plan. e-Term plan is cheaper than its offline counterpart Jeevan Amulya but is still one of the costliest plan available in the market.LIC has the best claim settlement ratio of 98.2 %.
As you can see above eTerm plan for LIC comes with a maximum premium of 16790 for 30-year-old male non-smoker for a 30-year term.
Preferred e-term plan from Kotak life
Kotak preferred e-term plan is amongst the most economical e-term plans available in the market. The premium for 30-year male non-smoker comes to around 8481 which is amongst the lowest in top term insurance plans.Maximum policy term is for 40 years so you get cover for a longer period as compared to some other policies.
It provides customized payout options you can opt for an immediate payout as well as a recurring payout. In case you opt for a recurring payout your nominee will get 10 % of the sum assured immediately and balance in 15 years through equated monthly or annual payments.You also get a basic waiver on permanent disability in case of permanent disability all your future premiums are waived off while your policy continues as it is.
As with all other top plans e-term plan from Kotak also provide e-accident death benefit rider which pays out lump sum benefit on accidental death of the life insured in addition to Death Benefit under the base plan.
i-secure from bajaj Allianz
I-secure from bajaj Allianz allows your to secure you and your family including your spouse. You can create an individual plan or create or create a joint plan with your spouse.You can get the benefits in 5 year or 10-years installments.
e-Shield from SBI Life
E-shield is the online term insurance plan from SBI. e-shield has premiums on the higher side and also does not have a great settlement ratio.
E-shield currently offers following plan options
- Level cover
- Level cover with accidental cover business
- Increasing cover
- Increasing cover with accidental cover business
The accidental death benefit will be 50 lac or basic sum assured whichever is lower.
How to select a best life insurance plan
Here are key guidelines to select the best term insurance plan
- Avoid term plans with bells and whistles: Always look to buy pure vanilla term plan which covers your dependants in case of death. Most of the term plans will have options which give additional incomes or come with riders like accidental covers or critical illness covers, just check the add-on cost you can always buy them separately
- Look at claim settlement ratio of different insurers : Claim settlement ratio is published by IRDA for all the insurance companies, ensure that you review that data before buying your term insurance. The worst thing that can happen for a term insurance claims not getting settled or not getting settled promptly. Claim settlement ratio tells you how likely are your dependants going to receive the claim
- Do not forget inflation while deciding the term insurance amount: When you are buying a term insurance one of the basic questions you need to answer is how big should be my term plan cover amount. While 1 crore or 2 crores might look very big as on today, you should always understand the term insurance might be useful much later in your life. And over years inflation will reduce the real value of these investments. So whenever you decide cover amount know that ongoing inflation in India is about 7 %
- Online term plans are cheaper than their offline counterparts: Buy term plans online directly from the insurer site, this is the cheapest way to buy a term plan . For one offline term plans are costly secondly you can review all the plans and chose the best option
- Look to buy term plans with extended age coverage :Look for a maximum tenure of the plan, this gives you extra years for which the term plan will be available and can extend the cover over a longer time frame
- Cheapest is not always the best and costlier plans are not necessarily bad
Why everyone needs Life Insurance
Here are key reasons why everyone should have a life insurance:
- While most companies offer some kind of health insurance, Life insurance covers are not that common in most of the companies, so it is important that you buy a separate life insurance cover, also this insurance cover will help much after you have stopped working.
- Premiums rise with very fast with age especially once you hit 40. So earlier your buy better it is. Do not postpone your life insurance purchase buy it sooner than later
- Provides financial security to your dependants for some time. Ideally, your life insurance plan should cover for 7-10 years of expenses. Untimely deaths can create financial havoc for families, especially if you are the only earner in a family. Life insurance provides some degree of financial security to your immediate dependents in case of an untimely death. While life insurance is not designed to cover for all financial needs of dependants, It will provide the necessary breathing space in case of an unfortunate happening
- You can get critical illness covers within term insurance this helps you cover for critical illnesses which might not be covered fully by your health insurance. There are a lot of critical diseases which require costly treatments and can be debilitating on your finances and are not covered fully by your health insurance. Critical illness cover bought stand-alone or along with your life insurance cover can come in handy in these scenarios.
- With Life insurance cover you can also add in an Accident death benefits, accidental
Key Features of Term insurance plans
- Tax benefits: Term insurance plans are eligible for tax deductions under section 80 C. the premium you pay for your term insurance thus can be claimed as tax deductions under section 80 C as per the income tax rules.
- Minimum age of 18 years: You would need to be 18 years old to apply for a term insurance policy.
- Minimum and Maximum policy term: In general for most companies, minimum policy term is 10 years, though some plans do have 5 years as the maximum plan.Maximum policy term is generally between 30-40 years.
Frequently asked questions on term insurance
- Are there any death reasons not covered by term insurance?
In general, most of the insurance companies do not cover deaths due to terrorism, Deaths occurring due to wars, or caused by natural disaster like earthquakes, floods, tsunamis, cyclones etc.
- Will the premium on my policy remain the same throughout the term of my policy?
Yes in general if not specified otherwise in the policy term the premium you pay for your policy remains constant throughout the term of the policy.
- What is an ideal term for which I should buy the term insurance plan?
Ideally, you should buy a term plan until the time your retire, If you are confident that you will have resources to pay premium post retirement than you go for the maximum term available
- How much insurance cover should I buy
How much cover you buy should be a function of your financial obligations including loans, requirement for kids education marriage etc and other possible liabilities as well as your assets and earning a potential of other members in the family. So you need to do some scenario analysis to figure out how much money you will require in a case there is an eventuality how much money will suffice based on above analysis. Also an important variable you need to thing about is inflation as it keeps on reducing value of your money
- Can NRI’s buy online term plans
NRI’s can buy online term plans, only challenge is how they will get a medical examination done for which they need to be present in the country one option is whenever you visit the country you can complete the medical check-up the process. Otherwise, there are no legal or regulatory hurdles for NRI’s to buy online term plans
- Why online term plans are cheaper than offline term plans
Online term plans are cheaper than offline term plans as online distribution cost is lower than offline plan as companies do not need to pay high agent commissions