Are Private Life Insurance Worth?

POSTED BY Manish Bansal ON September 25, 2010 12:06 am COMMENTS (6)

Are Private Life Insurance Co. performing good Job for Indian Public or just making a great money for themselves?

Are they fulfilling their social Responsibitlity?

Are Private Co. worth for Investing for 20 – 30 years Horizon?

Are Private Co. Plan making benefits for Indian masses as on todays Date When ULIP Guidelines have been changed?

6 replies on this article “Are Private Life Insurance Worth?”

  1. Atul says:

    Hi Manish,

    Look at Life Insurance purely from your need perspective. If you find the same cover for lesser premium and settlement track record is good please go for it.

    Myth of LIC being the best in Insurance sector is gone. Most of the private life insurance companys are doing good and are eating into LIC market share.

    Regards

    Atul

  2. JayaprakashReddy says:

    Adding to Dhawal’s point, IRDA also put up guidelines regarding solvency ratio which assures that they are safe to take up by a policy holder. Here is little summary found from an article in http://www.insurancemall.in/I-Opener/post/2009/02/How-Safe-The-Private-Life-Insurance-Companies-Are.aspx

    “The regulations stipulated the minimum solvency margin, which an insurer must maintain at all times. Separate solvency margin will be required for long-term and general insurance business of a composite company so that each business will stand on its own and not subsidize the other. For life insurance business, the minimum solvency will normally be related to the policy reserve as disclosed by an actuarial valuation of the liabilities. For general insurance business, it is related to the higher of a percentage of net premium or net claim. There will also be a certain minimum amount required to be maintained under statute in the solvency formula for each of the lines of business.”

  3. Dhawal Sharma says:

    INSURANCE has got nothing to do with PRIVATE or PUBLIC…First of all, just like RBI – the govering body on all banks – There is IRDA – Govering body on all insurance companies, be it PVT or PUBLIC…Secondly, IRDA has stipulated that any private company starting its business in collaboration with some FOREIGN PARTNER as a joint venture, that FOREIGN PARTNER has to be at least 100 years old in the insurance sector..So those companies, for eg TATA AIG – KOTAK OLD MUTUAL – ICICI PRUDENTIAL are in fact older than LIC in insurance field…So nothing to worry about their credentials…Moreover, IRDA has laid down guidelines as to once any INSURANCE COMPANY has started its operations can not CLOSE DOWN its insurance business, it can just change ownership through MERGERS & ACQUISITIONs…So they wont be going away anywhere and will be doing healthy business..And yes, there are many companies (Four to be precise in the last year’s IRDA’s ANNURAL REPORT who have marked profit) who are doing great for themselves as well as their policy holders…So just check out the features that suits your requirements and go for them; rather than worry about PRIVATE or PUBLIC company…

  4. Manish Bansal

    Are you asking it from Term Insurance point of view or other endowment/Ulip policies ? Because if its a Term Insurance then one point is that Pvt insurance companies are obviously more cautious in scrutanising the case more deeply in case its very early claim like 1-2 yrs , compared to LIC which settles the claim fast, however for cases where policy has been in force for long like 8-10yrs + , there its not that much of problem

    When it comes to Endowment/ULIP;s , all are same overall ..

    Manish

    1. Just wanted to add my 2 cents here. Endownment & Ulip’s are not the same overall.

      I give you one example. A couple of years back, Axis bank was getting 80% commission to sell one of the product of Metlife. They were trying to pitch that product to each & every customer and they did good business that time. Now, looking at such commission, you can easily imagine the charges of that policy.

      Even in case of endownment & money back policies, there is a premium difference between SBI Life & LIC (I know at least 2) for the same age, S.A., & tenure.

      Just keep your eyes open & read brochure carefully before signing your cheque.

      Hope it will help.

  5. It’s not the question of private company or Govt. The decision should be based on product features you’re comparing with.

    Do you think all the plans of LIC are good. No.

    You need to understand the product, all terms & conditions, taxation view etc. & then decide. Review your plan & funds from time to time.

    All the companies have changed their ULIP plans after new guidelines. The charges in new plans are less as compared to old ones.

    Now, IRDA planning to cut the insurance commission to zero from next year. So, does that mean we can see ULIP with 0% premium allocation charges. May be!

    Hope it will you.

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