How safe private insurance companies are?

POSTED BY Jagoinvestor ON February 27, 2009 COMMENTS (115)

Many people have this concern about taking policies from Private Insurance companies. Let us try to understand about the factors which takes care of financial stability and ability to repay back customers there money.

In reality the only things differentiates one insurance company from other is the service the provide, there settlement track record.

Want to know why Insurance is Important ? Read this

Private insurance companies

Solvency Margin

It indicates how solvent a company is, or how prepared it is to meet unforeseen exigencies. It is the extra capital that an insurance company is required to hold to meet all the claims which arise.

In other words, Solvency margin refers to the excess amount of asset the insurance company has to maintain over its liabilities. Basically, it is the amount the insurer has to stash away in order to pay the claims during emergency.

IRDA requires the insurance companies to maintain a particular level of solvency margin for their smooth functioning.

Why is Solvency Margin there?

Companies have Assets and Liabilities. In some adverse situation, Assets are used to payoff all the Liabilities. Suppose there is company which has assets of 100, and liabilities of 100. In ideal case it would be able to payback the liabilities. But what if some adverse situation occurs and liability increases unexpectedly.

In that case company will be declared Insolvent (Bankrupt). This will be a bad situation which every customer does not want to experience.

Thats the reason, Solvency margin comes into picture, The excess margin maintained by the company provides that extra cover which may be required in case some thing totally unexpected happens.

by the way, i am now on twitter, so you can follow me and get updates on twitter.

What is the current Solvency Margin?

Current Solvency Margin is at 150% for Life Insurance Companies. It means for every Rs 100 insured the Insurer should have 150 with them.

Does it mean customers are totally safe?

You must have understood Solvency margin till now, but what if some bad event of High Magnitude happens and then Liabilities of company (the claims they have to settle) crosses there total assets + extra margin, in that case they will not be able to pay back, but the chances of this happening is very very small, and generally Solvency margin takes care of it.

Some bad unexpected event like Earthquake or some terrorist attack which kills say 1000’s of people can dramatically increase Insurer’s Liability, but in most of the cases its always taken care by choosing adequate Solvency margin. But there are always that small percentage chances of the Failure which you have to live with and we cant do anything.

So what does it mean for us common Investors while choosing Insurance Products?

Solvency Margin has to be maintained by all the Insurance Companies in India whether its Private or Public sector. All the companies are at same level, Some of them are old, some are new, some are big and some are small, but its same for all and everything is under IRDA norms and scrutiny.

So decisions based on How safe or unsafe a company is not relevant now . Risk is with every company and that is equal for all.

So for people who are going to take Term Insurance, the best thing is to go with the cheapest price and good record of claim settlement. There are many new players in this market who are so new that we don’t have any long track record . like for Religare Aegon (which is my favorite).

So for term Insurance, just break your cover into 2 parts and take insurance from 2 companies to diversify the risk further.

Read tips while taking Term Insurance


This is what many people never knew and they take there decisions based on just trust and how long company has been in existence. Huh, people trusted Satyam and Lehman Brothers also, so what !!

115 replies on this article “How safe private insurance companies are?”

  1. Rajagopalan says:

    Dear Sir
    I am 22 and have taken a term plan with HDFC for 50 lacs. I want to take another term plan for 1 Cr. I have the following criteria viz, one with the longest term ( number of years), one with moderate premium. After comparison I find that Ageon Religare has the plan for maximum years ( 53 years ie till I am 70) and also the lowest premium. Can you advice if it is ok to go with Ageon for Rs 1 Cr

    1. Hi Rajagopalan

      While there is no issue in going with another company, why dont you keep it with the same company itself ? It will be a better choice. Let us know if you want us to connect with right team at HDFC who can take care of your policy issuance ?

      JUst fill up this –

  2. Triyambak Singh says:

    Hi All,

    I need your suggestion regarding TERM Insurance plan , I am 30 Years old.
    could you please suggest me which term insurance policy is best for me in terms of
    benefits, claims, premium amount . since i am now 30 years old i want take policy for 30 to 35 years for sam assured 50 LAC. should i choose LIC or any private comp and take policy with one company or divide it two comp.

    1. You can go with LIC if you do not trust other pvt companies, but better do not divide it into two now

  3. Mr. Confused says:

    Thanks for the great sharing.

    I was googling for some good Term plan and my search ended here. Aegon i-Term is cheapest one, but still I can not make my mind for that. Now I’ll choose from HDFC-Life, Kotak and ICICI-Pru. Could you please put some light on these products?
    And I am thinking of a small HIGH risk investment plan, can you guide on that? Please keep following parameters in mind:
    Benefit – 80-C
    Risk – High.
    Return – High.
    Budget – 2,000 to 3,000 per month.
    Duration –
    1. Minimum 6 years, maximum 15 years.
    2. Minimum 6 years, maximum 25 years.

    1. Hi Nitin

      YOu should choose HDFC or Aviva , there is no difference as such , but you have to go with the one you trust more .

      Your premium should not be more than 10-15k per year !

      1. Nitin says:

        Thanks Manish,

        I was a bit confused on this, I’ll go with HDFC. Could you please suggest me on my second query:
        “And I am thinking of a small HIGH risk investment plan, can you guide on that? Please keep following parameters in mind:
        Benefit – 80-C
        Risk – High.
        Return – High.
        Budget – 2,000 to 3,000 per month.
        Duration –
        1. Minimum 6 years, maximum 15 years.
        2. Minimum 6 years, maximum 25 years.”


        1. You can then start a SIP in some mid cap mutual funds like DSPBR Small cap

          1. Nitin says:

            Thanks Manish,

            Though JagoInvestor is already popular among investors, but still I’ll feel proud to share this knowledge and blog with my friends and colleagues.


            1. Thanks . It still not known to many investors 🙂

  4. Mr. Confused says:

    Thanks for the great sharing.
    I was googling for some good Term plan and my search ended here. Aegon i-Term is cheapest one, but still I can not make my mind for that. Now I’ll choose from HDFC-Life, Kotak and ICICI-Pru. Could you please put some light on these products?

    And I am thinking of a small HIGH risk investment plan, can you guide on that? Please keep following parameters in mind:
    Benefit – 80-C
    Risk – High.
    Return – High.
    Budget – 2,000 to 3,000 per month.
    Duration – 1. Minimum 6 years, maximum 15 years.
    2. Minimum 6 years, maximum 25 years.


    1. Mr. Confused says:

      my age is 29.

  5. Shiv Prakash says:

    I want a term insurance policy for around 50 lakhs.. this company settled the claim miximum . In IRDA’s report for 2012-2013, the ‘claims settled ratio ?????????

    1. Go for LIC in that case !

  6. srinivas says:

    Hi, I want to take Term insurance total of 75 lacks from two companies ,

    1)Please suggest one from the following Religare Iterm , HDFC life, Aviva I life , ICICI, Bharti Axa-eprotect , Kotak, SBI smart shield (I have Lic Jeevan Anand- SA 5 lacks)

    2) Now i may go with one which has highest settlement ratio but there will be no assurance that the company maintains that ratio in future right?

    3) I have thought of surrendering JEEVAN Anand , what do you suggest ?

    4) The test they do before policy are very few ( But there may be case the insured person may have silent killing diseases with no symptoms those are not aware), what if the insurer rejects the claim based on this , saying not genuine 

    1. Srinivas

      1. Anyone is fine . But you need a name , so i would say Aviva

      2. You do not understand what is claim settlement ratio then . Its not a number which you can project in future. Its just the past experince of settlement. Do not worry too much on that

      3. Yes, go ahead

      4. He cant reject those things ..

  7. Ajay says:

    Dear Sir,

    I want to take a pure term plan, & as per my analysis I have found HDFC, Aviva & Bharti Axa are best.
    Aviva & Bharti AXA having almost same Premium and are cheaper than HDFC.

    Shall you pls confirm which will be best.


    1. Yea . you can go ahead with them

  8. vinay says:

    Sir ,
    I want to know that i take the online term plan, i see the tow low premium of insurance company Bharti axa & aviva in both company Bharti axa have low premium. I want to know that is this safe to take Bharti axz online term plam, company good claim ratio and Solvency Ratio. According to you which one is best for online term plan. please tell me to find out good term plam

  9. Gandhi says:

    Yes there could be cases of people giving false information, but the same applies to LIC also, do you think all the people are who insured with LIC gave accurate information. Which company settled claims faster during 26/11. How come they have 97% claim settlement record. The point is to just to save 10 to 20% do you want to insure with some one with bad track record or with insurer like LIC which has good track record, surplus cash, backed by govt. In fact for term policy the premium is not deciding factor to choose insurer.You need insurance for at least 65 years of your life, so it will be foolish to choose the insurer based on the premium.

    1. I agree with you , I agree that LIC is better overall in terms of settlements, but you dont know (and no one knows) , that whats the settlement ratio for pure life insurance policies when DEATH HAPPENS . Read the link I gave in last comment.

  10. Gandhi says:

    According to figures released by insurance regulator IRDA’s report for 2009-2010, the ‘claims settled ratio for Aegon Religare is a measly 48%, and the claims repudiated ratio (the number of claims rejected with respect to claims received) is as high as 44%.For the 2008-09, Aegon Religare had not settled any of the claims that had been submitted to it. On top of that, the insurer repudiated 71% of the claims that had been submitted to it in the above period.

    1. Gandhi

      Thats numbers, its was just 7 cases and 6 of them had lied about their medical conditions while taking the policy , yes they were not honoured, and if you were the insurance company you would also not honour them , All the genuiune claims are always honounered . I am not in favor of any company , but thats how it works.

  11. Gandhi says:

    Even if LIC is 10 to 20% costlier than other insurance provides, it has very good claim settlement record. Claim settlement record is the most important factor to be considered while taking the policy. It would be great if you can add the claim settlement record for others when compared to LIC. Whats the point in taking cheap policy when there is uncertainty about settlement. You should never throw good money behind a bad one.

    1. You have to be worried if you lie ! , else not .. the data which you see for not paying claim is for those cases where it does not make sense to pay , you will do the same if you are a company .

  12. Rupesh Gupta says:

    I have taken few ULIP Plans from 15-25 years maturity from HDFC for a total of around 4 Lakh per annum for the past 6 years and will continue for the term of plan. .In view of bad market run for the past 3 years the NAV of the plans is not that great but I hope it should give decent return in long run. I wish to make further investment of around 10-15 lakh per annum for another 20 years with some insurance. I am a businessmen so the facility to add or withdraw as per business requirement is important for me and so I do not wish to lock-in my money in term plan but wish to have excellent returns in long run. Would it be advisable to go for more ULIP and which is the best plan or there are better options for me.

    1. I think nothign other than a FD works in your case . Only that will give you good retunrs along with premature withdrawal facility

      1. Rupesh Gupta says:

        Dear Manish,

        Thanks for the reply. But the FD interest will be fully taxable so the post tax return to me will be around 6% as per current high rates of interest which surely will go down further in future and there is no insurance element. I guess equity oriented ULIPS with facility to top-up limited surplus money and ability to withdraw partially after 5 years lock-in can give good tax free IRR in the range of 15-20% in long term of 20-25 years. Secondly, I have heard that traditional plans of private companies (with participation in profits) are able to provide better return than LIC as they earn around 9.5% (Tax Free) on average whereas LIC’s return(bonuses) is only around 6-7% and, after 3 years of lock-in, if there is any temporary business related fund requirement loan will available from private companies as well similar to LIC. The only issue appears to be that of trust as LIC is here for so long and one can calculate with some assurity that what he will be able to get at maturity whereas Private cos. are new and nobody has received the maturity amount to know actual IRR. What do you say.

        1. Yes thats true .. I was not just looking at returns , but also the simplicity part . Its totally on you what you give more weigtage !

  13. ganapati says:

    IS edlewiss tokio is approved by IRDA or not pls tell me sir

  14. ganapati says:

    why the reply showing as jan 22 , 2010 date for recent post

    1. Some technical issue . how does it matter ?

  15. ganapati says:

    hi Mr Manish,

    i want to invest 1 Lakh per year upto 10 year
    which is the best one pls guide me sir

    1. What is your risk taking capability ?

      1. ganapati says:

        Hellow sir,

        You are doing very great job
        I am very big confusied
        I dont want take any risk
        I need 100% security. how much amt can get maximum in 10years if i invest 1Lakh per year nad which company and which policy is best

        1. Then just invest in FD , it will be 2-2.5 times in FD

  16. Rohit Singhal says:

    Hi Manish,

    The rates offered by Aegon Religare are mind boggling no other company is offering such rates. For a sum assured of 1 crore, policy term of 75 years with Critical illness rider at my age of 30 the premium comes out to be Rs. 8738/- It is too good to be true. What is your suggestion is there anything hidden or they are just aggressive to capture some market share? Also can you tell the share holding pattern of holding companies…? Out of the three Bennet coleman is the only relibale name for me.

    For my insurance requirement I am planning to take the above policy from Aegon Religare and also 50 Lac sum assured from TATA AIA Life Maha Surkasha Supreme plan with “Pure protection cover with Life stage Plus” Option to increase the cover by 50% more if felt neccessary after some time. Tata is one of the most trusted and ethical companies i feel. What is your suggetion on this?

    The total premium for both the policies is coming out to 8738+7650 which is approximately as per my budget of Rs. 50 per day…..
    Please suggest if you have any better schems…

    Please reply I need an expert advise on this….


    1. Rohit

      Yes their premiums are cheap and there should be no catch , except that the number you told me might be excluding the service tax , there are companies like Bharti Axa and Aviva who also have a very low premium . I dont think nothing much is the issue , you can go ahead if you trust the company !

      1. T.S.Ramakrishnan says:

        Nice blog and truly informative. The IRDA has brought out a hand book on Life Insurance in 13 languages and you can download it if you visit the site and click on that page ” IRDA consumer education” wherein you will find what are protection to the consumers are available. You will get the details of ” Integrated Grievance Management System” (IGMS) for the protection of the consumers including claims. The stipulation by IRDA of moral and mandatory responsibility on other Insurance Companies to take over the bankrupt company as informed by one of the commentators is not made public by IRDA. If it is true and is made public by IRDA it will create level playing field for all Companies and the liberalisation policy of Insurance will be fruitfully substantiated with competitive services by the Private Companies.

        1. Thanks for that info , I was aware about it , will post something on this soon

  17. Akshay Saxena says:

    Hi Manish

    You are doing a gr8 job through this blog!!

    Following is my understanding about the term plan, correct me if I am wrong pls.

    My current age is 25 and was looking for a good term plan as the premium would be less now and for a maximum period.

    After doing bit of comparison
    Best choice comes as Aegon Religare which gives me cover of 50 lacs upto the age of 75 at a premium of 5800 with accident riders as well.

    As we know LIC as a brand I also have a natural inclination towards it.

    But LIC Amulya Jeevan has the max term of 35 yrs (Premium : 14700/-) so if I take it now it will cover me only till 60 yrs which i think I would outlive ;-).

    So it is better to take LIC at 35 yrs so that I can be covered till the max maturity age i.e. 70.

    So what I think I should go for the Aegon Religare for now and later at 35 or as and when LIC or SBI kind of organizations launch policy which could cover me till 75 or more I can increase the sum assured as per the need and affordability.

    Comments and thoughts welcome…!!!

    1. Akshay

      Dont get stuck with too much analysis and “if” syndrome . Just do it .. take a term plan for now !

  18. Parag says:


    I also heard that in case of bankruptcy, the IRDA norms says that a set of other few insurance companies need to come together and buy the bankrupt company. They need to do it and its a part of a process while granting the insurance license to them

    Do you have any idea. BTW the information was given to me by AG executive

    1. Parag

      Yes , other insurnace companies will be buying the insurance company which will go bankrupt , but IRDA norms are very strict in mmaking sure companies are always above the water level . so its very very rare


  19. sadagopal says:

    when they say, new entrant into private life insurance industry has to invest necessarily 100 crores as equity paid up., where do they nirmally invest? cd you pls.expalin on the above?

    1. Sadagopal

      Who says that ?

  20. abhi says:

    thanks…i am going forward n taking the all new and enhanced sbi smart shield….a great term plan from SBI…cheapest in its category…n has some handsome riders as wel…is suppose manish shud let everyone know about this plan…it simply awesome…and from SBI…so no issues…

    1. Abhi

      Is it cheaper than Kotak ?


      1. abhi says:

        for higher sum assured….yes….2-5% cheaper than KOTAK…

        1. hmm .. nice to hear that , can you tell exact premiums and from where did you compare them ?


  21. abhi says:

    im 45 years old and planning to take a term plan worth 35lacs..the LIC premium for my age is 27000…while other private companies like kotak(18000 Rs.)offer much less premiums…should i go for private players….are there any settlement issues with them as they provide such a less premium…or simply go for the trusted LIC

    1. abhi

      As far as your provide right info in the form while taking up the policy , there should not be an issue , however for the best case you can take 20 lacs from LIC and rest from kotak or SBI (SBI recently came up with a new term plan which is cheaper)


  22. Sathiya says:

    I’m holding a 40L term insurnce with HDFC. It is about to be renewed. Could you please let me know if it is a good one to go with(w.r.t claims) or i should choose a different provider.

    1. Sathiya

      The claim figures you can get from IRDA report . as per my understanding the claim figures are ok .


  23. Vinay Sarda says:


    Pls any one can suggest for SBI SHEILD Term Insurance Plan (Increasing Option) its best thing I have seen in the Term Plans over the Net.
    And its SBI too……

    Is it worth or sum more research had to be done in this regard. ?

    -Vinay Sarda

    1. Vinay

      You can go for it , What exactly do you want to hear to get convinced , any thing specific ?


      1. Vinay Sarda says:

        Manish I had taken SBI Sheild Term Plan Increasing cover with (TPD & AD Rider) 2 months back . And now ICICI Pru Life had come with there Online Term Plan named iProtect which is around 50 % cheaper then what I taken ? So what to do now ?
        And also new Mortality Rates are coming in couple of months acccording to IRDA which might be 15-20 % lower then existing ones ? Will this benefit been transfered to exisitng customers if they wanted to ?

        1. Vinay

          You have paid one premium already , so this year is gone , but from next year ,they will pass on the benefit , if they do not, stop your policy that time and take the new one 🙂 . no big deal


  24. ravikanth says:

    Hi Manish,

    I would like to go for preferred term plan from Kotak.
    Sum assured is 40lakhs.
    How safe kotak term paln.
    ravi kanth

    1. Ravikanth

      Its as safe as others .. What are you looking in safety ?


  25. Desai Bhavesh says:

    Dear Manish,
    To be or not to be!!! A situation through which we all have to pass while selecting Type of insurance policy and companies from whom we will buy.
    Brainstorming about private or LIC on your site is worth reading.
    How one can find settlement record of the companies? for all policy, term, endowment, ULIP? Is IRDA provide this data?
    As we need to have pakka data on which we can take important decisions like insurance.
    We should not make private VS LIC thinking. After all LIC also is an for profit company. If LIC is & was so concern about our insurance and not commission then why we don’t get call back from our agent when we ask about term insurance?
    We should impartially do analysis and think to arrive on our choice of insurance company.
    IRDA should promote term insurance as a concept and should also provide, communicate surety they provide to customer while they buy insurance products from private insurance companies. Then only we will be able to take benefits of liberalization of insurance sector.
    If some one share data for % of term insurance to other polices, private vs LIC, what they sell will give much needed light .
    Thanks for thought provoking blog. I thank you for such good service of disseminating, simplifying simple looking but highly complex world of insurance, that too with admirable speed and style.
    Keep it up.
    Bhavesh Desai

    1. Bhavesh

      Annual reports from IRDA is available for public at . It might not contain all the date you want .

      I agree with you that IRDA should take a lead in educating investors about the Term insurance .

      Thanks for your comments 🙂


  26. dinesh says:

    ohh ok sorry will keep that in mind the next time i comment

  27. dinesh says:

    lic wealthplus plan similar to the reliace ,birla and bajaj but has the cheapest fund management charges n allocation charges


    1. Dinesh

      Please refrain from leaving your contact id or contact number in comments. its against the comment policy on jagoinvestor unless i allow explicitely . Thanks for understanding


  28. Rahul says:

    Term insurance, the differentiating factors should clearly be :
    1. Settlement claim – Most critical factor. If a company rejects claims on flimsy grounds, no point in taking its policy. Due diligence needs to be done
    2. Cost – After the settlement claim factor is settled, go for the cheapest option.

  29. pankaj says:

    I think Aegon’s iTerm is just a way to earn Money by Aegon Religare. They know that cheap insurance will attract people to buy them and hence they end up buying a policy that have premiums by no claim amount if it arises. Just a Total waste of Money in Favor of Aegon’s Pocket. Best insurance is Term insurance by LIC with no Claims pending Record. In LIC you can at least expect that you will get the claim amount.

    1. pankaj

      What is the basis of your comment ? There are many companies which have less premiums than LIC . Is the same things not applicable to them ? Why is this comment for Aegon Religare iTerm plan ? Do you have any insider information for this ? Do you think IRDA has nothing to control here ? Please share your views .


      1. pankaj says:

        First of all i want to clarify that i have just given an example of Aegon because it has the cheapest premiuims. I have no personal problem with Aegon. Now my View is simply that the premiuim amounts set by companies are based on their past experiences ( based on the number of claims they get i.e mortatlity rate) but some new companies just for competetion are putting cheaper prices for the policies. This is just like marketing a Cheap SIM Card Plan. But Human Life is a Crutial Asset and the prices of premiuims should be as per the mortality rate. Problem comes when due to minor issues Claims are not settled.

        1. Pankaj

          The premium of Iterm is cheapest or the least because the other costs have been avoided like marketing cost and middleman cost like agent . thats why the premium is lowest here .


      2. Prateek Dwivedi says:


        You are living in India…where anything and everything can be manipulated….how much contol does IRDA really have…Indian Courts are full of Pending cases…Thoughts ??

  30. Suman says:

    Considering 10% IRR, my return would be 5,11,017/- after 15 years from the policy, hoping that I get more……!!! Dont have the exact details for 20 years….
    Aegon Religare iTerm plan is really cheap, immediately raises a question in my mind, how can they provide insurance so cheap !!!!
    For a 50 lakh SA for 25 years, my premium would be 4400/-…….unimaginable !!!!!
    1 crore- 8200/-, my vision seems to be blurred, am i reading correctly !!!!

    1. manish says:

      How do you get the figure of 10% IRR . As per 10% illustration the best ULIP (AR) has the IRR of around 8.5% .. ask your company to give you IRR .

      Regarding 4400 as premium for 50 lacs , yes thats correct .. thats mainly because of no middlemen and no sales cost in between .. as per the info given to me by AR representative .


  31. Suman says:

    Hi Manish,
    Good job man !!
    Yes, I am also the strongest believer in the MF+Term Plan against ULIP.
    Saying that, I would also mention that I have a ULIP from TATA-AIG (Jeevan Lakshya) with a yearly premium of 20k for 20 years. (Had to take that as the agent was my childhood friend…), but since its for quite a long term, am ok with that.
    I am 24, and have invested around 1 lakh in MFs in the last couple of years.
    Planning to take Jeevan Amulya Term plan from LIC for 35 yrs for S.A of 25 lakhs.
    Manish, any other Term plan that I can look into ?
    Though I know its grossly unjust, but I am a little wary of buying term plan from any pvt firm. Dont know why…..
    Any suggestions is welcome.

    1. Suman

      Can you share IRR of your Policy with 10% return consideration . It would be a good exercise to find that .

      Regarding Term plan , you can go with LIC. may be you want to look at other companies like SBI , HDFC & Aegon religare . Regarding private companies read :


  32. Joel says:


    Can you explain how the policies can be diversified in more detail with examples.

    Keep up the good work.

    1. manish says:

      calculate your insurance requriement , split it in 60:40 or 50:50 and choose 2 good insurance providors . that easy .

      what part you are confused with ?


  33. pradip says:

    Hi manish,

    One area where LIC scores over its peers is that it offers term policy(jeevan amulya) for 35 years while the rest offer a max of 25 years.
    Given that the age 50-70 is a very high risk age(try taking an insurance at the age of 50 and see how much premium they charge), that one will be covered during this age at a very minimal premium itself is an added attraction. Though I have to add that the coverage itself will be reduced by a huge margin due to inflation but then so will be the premium.
    If one takes insurance at an age of 25 yrs and again at 35 yrs, each will mature at the age of 60 and 70. Considering the average life expectancy in india is 60-62, there is a very high chance atleast one will produce returns with a little grace from god 😉 .

    1. manish says:

      hmm.. I would consider that by the age of 50-55 one will create enough wealth through strong investment planning , so the requirement of Insurance will be lesser that time compared to what one needs in 25-30 age .

      LIC offers the cover for 35 yrs , yes , thats the best part .


  34. Prasenjit Manna says:

    The settlement rate in LIC is good/higher than other private sector insurance companies. These private companies has their new rules for settlement. At the same time, LIC is old trusted name. IRDA should come up with new set of rules for claim settlements. After all its long commitment. what do you say?

    1. manish says:

      Yes , i think there should be some common ground rules framed by IRDA for settle ment process . nice idea .


  35. dinesh says:

    lic is the safest bet,its a matter of life insuring and incase of another reccession you might see your money wiped out,so dont run with risk

    1. manish says:


      Please give us the reasons for saying “LIC is the safest bet” … why ?

      Its nothing against LIC , its against the statement , I would still question if you say that for SBI , Kotak or whatever ..

      Apart from that , Also give reasons for not trusting other companies and reasons you think they will fail . What do you think about IRDA specifications and How it can fail in making sure that all companies are safe .


      1. dinesh says:

        Because in today’s day and age, you don’t want to be tensed as to where your money is going.

        With LIC ,I feel its more secure and at th time of maturity claim they come forward openly and give you the returns.

        The rules of IRDA for debt ratios n margins has been met by all he companies but at bad times for companies these margins will be met obviously by loans.

        It is just a precaution just te way taking LIFE INSURANCE is.

        1. manish says:

          Are you happy with the returns from those polices . If yes , then its fine to invest in them . I feel anyone can achieve more returns with same safety (long term MF + PPF) using other instruments . Safe is not always the best .

          What do you think is the return from LIC , its well known that the returns from Polices (any endowment) hardly beats inflation .

          How do you define Safety? If you invest your money somewhere and get more than what you invest , Is it called safe ? I do not agree with this . Your Thought ?

          Please reply.


          1. dinesh says:

            In PPF the returns are safe i agree, MF 60:40, but none of these instruments provide the same tax free return as well as an high insurance cover during the complete period.

            The return from your two said intruments cannot fulfil the needs of a family at a time of unfortunate demise.

            The safety part is not only the return that you get, its the amount recieavable at time of demise which lets the dependants fulfill their needs and maintain the same standard of living

            Unless your saying to take a long term MF + PPF and an insurance poicy.

            1. manish says:

              hmm.. Acutally I was talking about investment part only . Definately life cover should also be taken through a pure term cover .

              So what I mean to say at the end is take PPF + MF for invest ment and take Pure term cover for Insurance needs and a good Family Floater for Health Insurance . This will anytime beat Endowment polices or any other instrument .


            2. dinesh says:

              Pay LIC only 10,000/~ monthly for 25 yrs & get 1 crore , life cover of 50 lacs , 90 lacs in case of accident

              Manish don’t you think a return like this is meeting inflation,return and cover.


            3. Dinesh

              What policy are you talking about ? Also please let us know the return generated on this policy , IRR of the policy


            4. dinesh says:

              The IRR is 7.75%


            5. Which policy is this and how does it compare with Term Insurance + MF (equity diversified funds) for long term .

              Do you think 7.75% return from long term policies is what investors should aim for ? What are your views ?


            6. dinesh says:

              jan 18 2010,
              According to the Insurance Regulatory and Development Authority (Irda), around 9.1 million policies lapsed in 2009 and some private sector insurers have shown a lapse ratio as high as 50% or even more
              BHARTI AXA-46%
              LIC OF INDIA-4%


            7. Thanks for the Info .

              I think it is because of the faith in LIC that people keep continuing the policies . Can you also divide this info in Term Insurance / ULIP / Endowment plans . What ratio of this is what .

              Can you also share the source of info . thanks


            8. T.S.Ramakrishnan says:

              Why the comment dated January 22, 2010 has appeared after August, 19, 2012.

            9. Gandhi says:

              I am not supporting LIC, the bottom line is when insuring life chose with good claim settlement record, surplus cash, can withstand the worst recessions, too big to fail( remember what happened to AIG during 2008). These should be deciding factor than the premium. so if you consider these parameters LIC is much better than rest of insurance companies.

            10. I am also not supporting any company , but sharing what I know .

              LIC has high claim settlement number, agreed , and I am sure its high , but why is it so ? its because the number is skeweed a lot on the maturity claims for the normal policies which mature , not just for death claims . Read this

  36. Siraj says:

    Dear Manish
    If I have a term insurance policy for around 50 lakhs.. And I die tomorrow..:-(

    Which company will settle the claim with the minimum hassle..
    Which company will create the minimum of harassment for my wife..
    Public sector or Private.. ?

    which company will refuse to pay because of some obscure fine print clause…
    Overall, which company will be very aggressive in trying to refuse the claim..
    Public sector or Private.. ?
    This is more important than the cost of the insurance premium

    Please Manish enlighten us on this..
    Dr Khan

    1. manish says:


      Insurance is just another Business , You might be taking it in a different way , you are thinking that Companies deliberately try to reject the claim just to save money . thats not the case .

      If there are issues , like Suspicion about the wrong data given about Health , or any fast which demands inspection , Every company will do their part of doing investigation and at the end , It will reject the claim . It does matter at that time if its LIC or some other Company .

      Even LIC has big number of claims rejected . LIC is not a fullproof Solution . No one can ever be.

      from our side . We can do this

      – Diversigy the risk by spliting the cover
      – Make sure you give 100% correct data .
      – Make sure you die in the best possible and transparent way 😉 , ok kidding :)).


      1. Deep Chand says:

        Manish, I can’t stop laughing like at your comment – “Make sure you die in the best possible and transparent way.”

        1. Deep Chand

          yea .. I thought a lot before putting that .. some humour while financial planning is must 🙂


      2. ASHOK says:


        1. I agree that claim settlement is one area where pvt companies have to improve , however i would say most of the rejection happens because of customer wrong data and lack of action against insurance claim . One has to take it forward . but i agree that LIC is best in claim settlement


    2. ashok says:

      lic is best lic claim settlement ratio is 97% in google search type lic top in claim settlement and read the article

  37. Manish Chauhan says:

    @Karan Batra

    I am sure if the claim amount should be seen as Losses to Insurance company , Cliams more than expected will be loss . Insurance business depends on probability . They already have a good idea of how many people will die and will claim besed on historical data .

    If there are more than expected claims, i would say its a loss then .


    Yes , When it comes to money , dont beleive anyone other than a knowledgable and qualified person .


  38. Sekhar Thulasi says:

    Thanks for sharing the light.
    That was awesome explanation.

    Insurance is a long term commitment so do a due deligence and THEN take a policy.

    Also read/take advise from people like manish, experts, etc.

    Not so good idea to trust the suggestions from family members and friends because they are really not experts!!! and especially from agents and employees from Insurance companies cos they never tell the truth, they only bother about their comission amount.

    – Sekhar

  39. Karan Batra ( CharteredClub) says:

    Whether they are safe or not, the matter of fact is its very difficult to get an Insurance Claim from them.. Getting cliam from LIC is still easy..

    After all the private player is also working to earn money rather than do charity… Your claim is a loss to the pvt player which it always tries to minimize

  40. Manish Chauhan says:


    Thanks for the wise words . Its the readers like you who know the importance of such things and you value it .

    These small things make your Insurance Planning Exceptional . Everyone knows Term Insurance is best , and knowing that is wonderful , but these tips and tricks make your Insurance Planning "Best" from "Good" .


  41. Amarnath Awargaonkar says:

    Dear Manish,
    Break the term insurance into two so as to diversify your liability of insuring in one company that too for a term plan!!! Well Said.
    Its this cautious attitude which people like me find very attractive in you.
    You are the man Manish.

  42. Manish Chauhan says:


    Thanks , While choosing Pension plans , there are same set of things to choose like Insurance , The other thing you have to see is how is there pension plans , what are the rules and does it fit in your requirement . What kind of costs do they have etc etc.


    1. Rajni Kant says:

      Hiiiii Manish….

      Hw r u???

      Tomorrow a news came that LIC facing a loss of 14000 cr. in three of previous pension plan…

      i am providing u a link……plz go through it

      and this also

      One thing which many ppl don’t knw is

      “Full sovereign guarantee on LIC policies”

      Plz include this in ur article.


      1. Rajni

        Yea . I had a look already yesterday ! .


  43. Anonymous says:

    Thanks Manish for clearing my doubts .Can you also explain us the things one should consider while choosing retirement plans /pension plans.

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