Best Term Insurance Plan In India
Last month i meet with an road accident. My car’s build quality was good, hence it hold the whole impact.I survived without a single stretch. That was the moment i started looking for Term Insurance. I did researching for couple of days, Because I wanted to buy Best Term Insurance Plan In India. When i spent some days on it, i found lot of options like HDFC, ICICI, Max Life etc. Soon i got familiar with their ads all over my phone and laptop. It all ended up creating a lot of confusion for a common man like me.
Every company was saying that we are best, So Take term insurance from us. But i was not in mood to get convinced by them so easily. The reason was too obvious. I already felt that Term insurance should be like that in case of any misshaping in future, my family should easily get the claim within any tension. My parents are not well educated. Hence the claim process and other things should not be like my family will be not able to get claim easily And My family’s future will be also not secure in that condition.
What is Term Insurance ?
It is very important for you to understand the meaning of the word Term Insurance. It means you will get insurance till a certain age only, not for your entire life. But you shouldn’t worry about it . As per my thinking whole life insurance is a very illogical thing. Its premium is 6-7 times more than Term Insurance Plan and even you don’t need it. The cover is also very less as compared to term insurance. You should ask a question to yourself that can you define an age for yourself, after that age, there will be no dependent on you.
I am assuming that when you will be 65+ years old, your children will be near 30 age limit. Thus your children will be self-dependent at that age most probably. You don’t need insurance after the age, when no one will be dependent on you. Some people prefer Whole Life Insurance but it is illogical. You just need to define the age when no one will be dependent on you. As per present situation, 65 is a good number for maximum people.
Best Term Insurance Plan In India 2021
I want to share all the information which I collected through my research. I will tell everything in this article which you need to know about term insurance. I will also share some secrets with you which a company don’t want you to know. I have simplified the entire complex research in a 5 step process. This will help you to find the Best Term Insurance Plan In India 2021. You should know that every company reject some claims every year despite how good the company is. We will also know that how can you escape that rejection while taking policy online or offline. You will also get a bonus tip in the end of this post, that will save your thousands of money.
Term Insurance Plan : Benefits
Let’s know that why term insurance is best when we talk about life insurance. You can get a very high cover in term insurance like up to 25X of your income. If you earn 5 lakh in a year then you can easily get 1 crore insurance. If your income increases in future then you can top-up it easily. The premium for this 1 crore insurance depends on your age. Like if your age is 25-30 , most companies charge 800-1500 per month premium. This is its most beneficial thing for you.
If you take Term Insurance Plan at a young age, your premium will be accordingly low and it will never increase with time. If i take 1-2 rider or add on with it, my premium will be near 1500-2000 INR. Hence we can say that Spending 15,000 yearly for 1 crore insurance is a very good deal. You have to pay 50k-60k yearly premium for the same 1 crore insurance for Whole life which is completely illogical. If you have more disposable income then invest it instead of spending it on whole life insurance.
- Less Premium
- High Insurance Cover
- Flexible Time Limit/Payment Options.
How to select Best Term Insurance Plan (Step by Step)
Hopefully, you have understood the importance of term insurance by now. Let’s know that how can you choose the best insurance company. You have to check following points. These will help us find Best Term Insurance Plan In India.
- Claim Settlement Ratio (CSR)
First of all, you have to see the claim settlement ratio. This is very important factor while choosing Best Term Insurance Plan. Suppose the company passed 98 claims out of 100 claims and rejected 2 claims. Then claim settlement ratio will be 98% which is a good number. But how will you check the claim settlement ratio or CSR. This data can be found in the IRDA report. Some good companies have a good CSR like 97.55 or 98% or up to 99%. So companies proudly show it on their website too. You may also check this data on website like Policy Bazaar. I have given list of 10 companies having CSR more than 97%. To name a few, Kotak, ICICI, HDFC, MAX LIFE, etc. Every company keeps its CSR high because customer check it first of all.
- Amount Settlement Ratio (ASR)
Lets understand it with help of an example. Lets assume, the company passed 98 claims out of 100. Suppose the total value of those 100 claims were 10 crore rupees and the value of each rejected claim was 50 lakh rupees. Thus company passed the claim of 9 crore rupees out of 10 crore rupees. Thus the amount settlement ratio is 90% here. This means that showing a high CSR is very easy for companies. They can pass small claims & rejecting the big claims.
This will show its CSR high but the amount settlement ratio will be still low. So, you should check the amount settlement ratio which can found in IRDA annual report. But this report consists of 200+ pages and there is a new report every year. So, you don’t need to read 200+ pages report every year. I will provide a simple excel file which contains entire useful data from IRDA Report. I will keep updating that report every year. You can download it from the link given below. It will be latest updated whenever you will download it.
On basis of the amount settlement ratio, i list out few names.I have only selected companies with 90% or more than 90% amount settlement ratio. There are some big names like TATA, KOTAK, HDFC, ICICI, MAX LIFE, etc. TATA has topped the list with the 96% amount settlement ratio. I will check all details only for these top 10 companies now rejecting the rest of all.
- Claim Rejection Ratio (CRR)
Now you have to check the claim rejection ratio. When companies get a lot of claims, there are claims which are under process. Those claims are not shown in the settlement ratio. This is equally important to know that how many claims are rejected by the company out of 100. I will only select the companies with claim rejection ratio below 1% . When I checked the claim rejection ratio for these 10 companies. On the basis of this factor, I rejected BHARTI, AEGON, AVVA, MAX LIFE, ICICI, KOTAK and ADITYA BIRLA. Reason, these companies have more than 1% claim rejection ratio. Now, we have LIC, HDFC, and TATA AIA.
- Asset Under Management (AUM)
Next I will also check their AUM. AUM stands for Asset Under Management. That means how much money is managed by a company. A company with high AUM is much capable in passing the claims in time of crisis. If I check the AUM of these companies, then LIC has more than 20 lakh crore (which is equal to Pakistan’s GDP). HDFC has 37 thousand crore rupees. TATA AIA has 16 thousand crore rupees. So, all three companies have a good AUM. So, we don’t need to worry
- Solvency Ratio (SR)
Now, you have to check the Solvency Ratio. It means that how many times assets the company has compared to its liabilities. This should be 150% minimum according to the rules. So, every company has to manage at least the ratio of 1.5. So that the company would have enough money to pay in any future crisis. This ratio changes every quarter and this is not much important. As they have to follow the rule of maintaining the ratio of 1.5. But a higher ratio is much better. IF we see the solvency ratio of these companies Then LIC has 1.6, TATA has 2.68 and HDFC has 1.88. All three companies have good solvency ratios but still TATA topped the list. Now, we have LIC, TATA, and HDFC as top 3 companies.
Now we have shortlisted three companies. Now you have to check their premium and other details so that you can get a insurance plan for your self or your family. One more thing you may check for getting better idea of Best Term Insurance Plan In India. I am talking about reviews. You can find reviews on various social media sites or other popular platforms. Nobody is perfect in this world. You must read them with extra care to find the issue people are having with these companies. I will suggest you take an online policy which will be cost-friendly. Although you may get to hear from agents that your claim will not passed in online but it makes no sense these days. Everyone is that much aware now. Hope we helped you in finding Best Term Insurance Plan In India 2021. For any doubt or question or further information, ask in the comment box.