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POSTED BY ON January 18, 2013 11:13 pm COMMENTS (8)
Hello Jagoinvestor Experts,
I am 33 years old software professional. I do have Life cover via corporate group insurance of ~1 Cr. However as per standard calculations I need around 2 Cr. total cover. I had a LIC jeevan beem gold policy which i surrendered recently. Now I am planning to take ~1 Cr online term plan. Based on my analysis I have short listed Aviva iLife and kotak e-preffered plans for 27 year duration. I m married but have no children.
Aviva has very compettive rates (almost 2/3rds of kotak) but kotak one has a nice options of step UP and step Down which is a practical need in life. However I am not sure if thats options is worth paying 50% extra premium every year.
Any tips/guidance would be much appreciated.
manish
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I think, You should go for HDFC Life Click2Protect or ICICI iCare Term plain. These two companies have best claim settlement ratio in the industry since long time. Both products are plain vanilla term plan which is good.
Vikash,
On the Claim settlement ratio here is my POV: I have looked that data for past 3 years including the latest 2011-2012 from IRDA. you can notice that every year Aviva & kotak are getting closer to icici and hdfc. 92% & 90% seems good ratio to me and most important thing is proper disclosure.
Dear Manish,
This is last 3 years claim settlement ratio (FY 12, 11, 10)
ICICI Pru i care –> 96.53, 94.61, 90.17
HDFC Click2Protect –> 96.17, 95.41, 91.14
Aviva iLife –> 89.55, 84.15, 87.11
Kotak ePreferred Term –> 92.1, 89.3, 86.97
Even in current financial year FY13, ICICI and HDFC claim ratio is head and shoulder ahead than Aviva and Kotak. Although Kotak is also good. Aviva is still almost 10% behind if you see average ratio in last 4 years.
Many say that if you provide all information correctly, There should not be any issue in claim settlement. If that is true, How come ICICI and HDFC has 10% higher success that also when volume is many times more than Aviva ? I don’t think it is co-incident that people provide right information to HDFC/ICICI but hide/provide few wrong information to Aviva. ICICI and HDFC combines has market share of almost 50% among pvt sector Term plan. They will always have excellent claim ratio otherwise they can lose big market share in no time.
Although, It’s an individual choice and difference is also not huge (10% or so) but i will always chose HDFC or ICICI. Generally, people chose other term plan simply because of low premium. I prefer paying little more premium and stick to top 2.
This is just my personal opinion. I am not against any company or policy but somehow i prefer best one rather choosing better just for the sake of saving some amount.
Regards,
Vikash
Vikash,
nice analysis. I had the same point of view about LIC too. There is a counter to this argument (though not by me)
“They will always have excellent claim ratio otherwise they can lose big market share in no time”
To maintain market share HDFC or ICICI could have settled claims which are problematic.
In LICs case they do it more because of a sarkari approach to the whole thing.
” I don’t think it is co-incident that people provide right information to HDFC/ICICI but hide/provide few wrong information to Aviva.”
How great would it be if we could proves this with statistics! But alas no.
Nice amount of data indeed.
My views:
1. Since how long have online term plans been in the market?
The point is these plans are there for last 2-3 years, so any part data is futile Totally.
2. Then, what is the individual difference between the various different types of insurance plans. The CSR published includes the endowment and ulips too. So, basing your decision on such an opaque ratio is not such a logical idea, in my opinion.
In general, the longer the duration of working of an insurance comp, higher will be the ratio of the non term insurance policies and higher will be the CSR. Nothing related to the individual working of the companies.
No of term plans will always be lower than other policies at any point of time. Therefore it would not be totally wrong to assume that CSR primarily reflects non-term plan death settlement at any year of the company’s existence. That is the problem. If a company has trouble settling policies with much lower sum assured than a term plan why should I trust it to settle a larger sum assured without hassles?
Of course the argument about honesty, disclosure etc. remains but a low CSR reflects a painful or at best rigorous claim settlement process which is not comforting. Term insurance is purchase only for that comforting thought and peace of mind.
Different policies have different issues.
articles.economictimes.indiatimes.com/2012-10-22/news/34653739_1_death-claims-insurance-buyers-click2protect/2
Dear Manish, please opt for a plain vanilla product from Aviva. In case you feel after 2-3 years that your cover is falling short, you may purchase either extra cover or purchase a new big cover altogether.
thanks
Ashal