Term Insurance – From whom to buy???

POSTED BY J ON September 25, 2010 11:12 pm COMMENTS (31)

Hi,

I am 26 years old, need an insurance cover of around 90 lacs and want to buy term insurance. I have already bought Jeevan Amulya from LIC for a cover of 30 lacs (Yearly premium – 9,270 for a term of 35 Yrs). I want to split the remaining amount of 50 – 60 lacs in another 2 different term plans, so that I can reduce one over a period of time if and when required. Please suggest which one should I opt for keeping in mind the after sales services and claim settlement ratio. I even raised a request with SBI Life, however they haven’t responded in over 7 days. Is SBI Life a good option, as I find there premiums to be quite competitive.

My Thanks to all of you for your time and suggestions in advance.

Regards,

J

31 replies on this article “Term Insurance – From whom to buy???”

  1. ashish9750 says:

    as my opinion LIC is the best option for term plan, bczz in term insurance best part is claim and term plan not provide any return after maturity.after the misheppining policy holder goes in heaven ,but nominees wait for claim, so choose realible company (bczz premiam does not meeter,only claim in term plan)……..ashish gupta

  2. Vasanth says:

    Hi,

    I would like to know if it would be possible for a person with Diabetes to buy Term insurance like ICICI iProtect? if so any idea what would be the extra premium charged compared to normal healthy person of same age.

    Thanks
    Vasanth

  3. Vishnu Prasath says:

    It is tempting to go for the Term Insurance with the Lowest Premium, especially for the Term Insurance Plan which is like No-Frills Plan. But, the most important factor should be the settlement ratio.

    Insurance itself is to give us peace of mind. When choosing cheap alternatives, the extra savings in premium should not be at the cost of the sole purpose.

    LIC is the most experienced and for the very reason, it should be option No. 1.

    IMO, In every one’s insurance plan, one should have at least 60% of total insurance requirement in LIC’s term insurance. For the balance, you can choose among the next best. In paper, ICICI, SBI and HDFC looks good. I will choose SBI for the brand factor, choice of plans and even the decent settlement ratio.

    To come out of LIC, we should wait at least for 5-10 years by when we will have enough data to prove the reliability of private insurance players. With little available data at this period, it is wise to choose LIC + some other.

    Off-topic, what ever the insurance company it may be, to reduce the possibility of rejections, we should fill the application form with 100% TRUE DATA.

  4. yogeshanand.mca says:

    if we fill correct information thn all companies will be same for us..

    one thing surprising..means like who ever take insurance frm LIC is filling form correctly 🙂

  5. Thennarasu says:

    Friends read this first and decide

    IRDA yet to disclose claims repudiation ratio for 2009-10

    IRDA has not disclosed details of repudiation of claims for 2009-10 for reasons best known to it. Private life insurers have come out pretty badly vis-à-vis LIC in this regard

    Claims experience has to be one of the most important factors to consider before finalising life insurers, because every insurer will love to collect premiums, but few insurers will feel the same about claim payments.

    Unfortunately, this crucial data is not available for 2009-10. LIC comes out better than private insurers in this regard. It too does not disclose its repudiation number for 2009-10, but hinted that it was slightly higher than 1.33% which was the figure in 2008-09. Looking at the atrocious claims repudiations percentage of private insurers, they may be the ones having something to hide. Can the Insurance Regulatory and Development Authority (IRDA) publish the numbers soon?

    Based on 2008-09 data, the most incredible statistic is that of Aegon Religare with no claims settled, 71.43% claims repudiated and 28.57% claims pending. Please see: http://www.docstoc.com/docs/58633842/IRDA-claims-settlement-08-09.
    It could be that for 2008-09 there were lesser claims being generated because of new business, and unfortunately, the claims that came in had to be genuinely repudiated. We have to give the benefit of the doubt if that is the reason. When a life insurance company gets a claim within three years of policy start there is always investigation and possibility of claim repudiation.

    Bharti Axa Life has recently unveiled its new brand positioning – “Jeevan Suraksha Ka Naya Nazariya.” It has a service guarantee of “Release of Fund Value within 48 hours” of receiving claim intimation. It is even advertised on TV. In 2008-09, Bharti AXA Life had 53.20% claims settled, 44.83% claims repudiated and 1.97% pending. Low claims pending shows that Bharti Axa certainly is making quick decisions on claims, but high claims repudiation means that one out of two claimants will never get claims paid, forget about the 48-hour claims settlement. We will again give the benefit of the doubt to this insurer if the 2008-09 data is indeed skewed due to new business.

    The reason for repudiation can be due to incorrect/hidden details in policy forms filled by a policyholder with or without abetment from an agent. It is imperative that the policyholder fills up the policy form completely and in good faith without the agent filling any policyholder personal data. An ethical agent who is properly trained by the insurer will not mislead the potential customer just for getting commission. The policyholder will be at a loss because the policy form will be scrutinised only at the time of claim.

    The other reason can be policyholders themselves indulging in fraud. As far as fraudulent claims are concerned, the insurer has every right to repudiate the claim.

    According to Vipin Anand, chief-corporate communications, LIC, “Repudiation of claims also has investigation cost and possibly litigation cost in cases of a policyholder filing a grievance. In some cases, these costs can be greater than the claims cost. LIC can repudiate claims on technicalities and policy wording, but it does not do so unless there is a fraudulent claim. Moreover, LIC is in a strong financial position and does not worry about the bottom-line when genuine claims have to be paid. We pay on (an) average 77,000 claims in a day. ”

    Private insurers are struggling to break even and will surely be scrutinising claims to a greater extent. It will be hard for them to keep up with the giant called LIC. When will private players measure up to the insurance behemoth?

    Read original article from here
    http://www.moneylife.in/article/76/10459.html

    1. Sagar says:

      Great job yar! But as per your home work which 3 company is the best options…

      1. Dharmesh Gangani says:

        Hi,
        Last week there was an article regarding Claim Settlement Ratio of a few Life Insurance companies. The comparision was between LIC & other Private Life insurers.

        http://www.dnaindia.com/money/comment_should-the-lowest-premium-decide-which-life-insurance-cover-you-buy_1461878

        As per the article, cheaper products with reasonable claim settlement ratio should be considered. And the winners in the category are ICICI iProtect & Met Protect.

        Meanwhile, I also contacted PolicyBazar to get another view on which term plan to take & asked them to suggest a best product (for SA=50 lacs; age=30 yrs) fulfilling the following 2 criteria.
        1. Claim Settlement ratio should be very good (or excellent 😉 )
        2. Life insurance cover should be for the maximum possible duration (for atleast 30 yrs or more)
        The third criteria (by default) was that premium should be reasonable.

        They suggested Aegon Religare iTerm. Reasons –
        1. Aegon Religare has a very professional team.
        2. This plan is available only in select cities.
        3. They have lot of checks before issuing the policy so that there is no question of claim rejection when there is a claim.

        As per policyBazar, since this policy is not available for masses (available only for a selected few & in selected cities), the service level for this policy is very high.

        I asked them about ICICI iProtect & Met Protect as they also offer plans with similar premium. But, PolicyBazar ppl said that service of ICICI & Metlife is bad. I have a relative who have worked for both ICICI & MetLife for nearly 1 yr each & she is of the opinion that MetLife is better that ICICI in terms of service & Claim Settlement.

        So now, we have MetProtect & AegonReligare to choose from.

        Can someone throw more light on their experiences so that we can zero in on the best term plan.

        Many Thanks,
        Dharmesh G

        1. Dharmesh

          Dont rely on PolicyBazaar when they say that iTerm is great, while it might be true , I get insider information from a policybazaar employee only that Aegon religare 50% selling happens because of Policybazaar , policybazaar or any kind of website like them are in business of generating leads (collecting contact info) , and selling it to companies .

          So there is big biasness out there … while iTerm might be good or bad is not the question , it might be one of the best .

          manish

          1. Sagar says:

            Manish I agree…
            You know all the points & you study all the products…
            who is the best?
            SBI, Kotak or LIC

  6. Dharmesh Gangani says:

    Hi Mukesh,
    A fantastic job done to collate the claim settlement ratios across insurance companies. This will definitely help most of us to make informed decision while selecting an insurance company for buying life insurance products.

    Thanks very much for your efforts.
    Dharmesh.

  7. Mukesh Gutpa says:

    Here is the Claim ratio data for different insurance companies. I got the data by going to the IRDA site and then to the website links provided by different companies and then going to the section-42 (i think so) of their annual report.

    2008/09 2009/10 2010/11
    Solved(Total) Solved(Total) Solved(Total)
    ======================================================================
    SBI 19649(20810+991) 32187(33597+616) 3732(5360+ 176)
    90% 94% 67%

    ICICI 9298(10378+365) 14862(15605+901) 3639(4472+ 1094)
    86% 90% 65%

    Reliance 3309(3804+4) 7906(8581+298) 2493(3372+ 352)
    87% 89% 67%

    BIRLA 2997(3282+17) 6175(6818+ 14) 2036(2256+ 14)
    91% 90% 90%

    HDFC 2549(2588+310) 5380(5510+210) 906(1072+161)
    88% 94% 73%

    TATA/AIG 1652(1977+243) 2709(3220+257) 724(659+307)
    74% 78% 75%

    Bharti 121(204 + 7) 401(513+4) 93(159)
    57% 77% 58%

    AEGON 0(5) 24(48 + 1) 0(24+4)
    0% 50% 0%

    canara 5(16) 36(85+8) 31(43+42)
    hsbc 31% 38% 36%

    maxny 2176(2089+358) 3911(5893+87) 819(1236+87)
    89% 65% 62%

    If you dont find a company, it is because they haven’t provided the data in an easy way. I myself finally went with SBI LIFE because of their excellent online website. Each and every detail is specified in a crystal clear manner.

    Data/Link for LIC was not available on IRDA website but their annual report is available on their own website but the report is TOO heavy to be downloaded. So assume LIC to good only 🙂

    The 2010-11 is the current year and hence lower claim % is expected. Rely on 2008-09 and 2009-10 data.

    The lower claim % of small companies should NOT directly imply bad companies. It is just that their claim % fall drastically faster since total cases are very small.

    take care 🙂
    Mukesh

    1. J says:

      Hi,

      Firstly, my apologies for replying soooo late…..secondly, thanks a ton for ur valuable well researched inputs…it’s becoz of people like urself that so many people are learning so much….Thanks again! 🙂

  8. Dharmesh Gangani says:

    Hi,
    I share the same dilema as most of you as to which term plan to buy. Does anyone have any inputs on claim settlement history of the insurers and how & from where can one access this data?

    I have shortlisted 3 plans based on premium quotes for my age (30 yrs) – ICICI iProtect, Aegon iTerm & Met Protect. My objective is also to take a term plan for the longest possible duration so that I am covered for the longest possible time with lower premium. In this respect, I am inclined towards Met Protect as it provides cover for 35 yrs as against ICICI 30 yrs & Aegon 25 yrs. But, I am not sure about the claim settlement history of MetLife & even for ICICI for that matter. Finally what matters most is in case of an eventuality, if my family has to go thru a lot of hassles during a claim, its better to pay more premium now & get a plan having best claims ratio.

  9. Ajay says:

    Metprotect from Metlife is a new entry. Looks like many companies will come up with Term Insurance soon

  10. Pardeep goel says:

    You can go ahead with EliteSecure of Bharti AXA Life. Its one of the economical one also. Not the cheapest but yet economical one. Bharti Provides good customer service also. They have term for 5,10,15,20,25 and upto age 75 term.

  11. sidrana7 says:

    J,

    I have two LIC policies which you said of. The customer service is not best but, hey the end effect in case if the insurance is to be claimed is priced in the little extra premium I pay right now. Once the policy is activated then you can service it online. I was not at the city during this process but hey LIC has got some excellent staff as well. The file took time for moving between offices as the risk value was high, so I was told. But got in the end.

    Another important thing is, one should buy term insurance ASAP he/she is convinced of the product, better in split number of policies to reduce over the time. Because the insurance premiums are based on applicant’s age alogn with some other factors. One thing you can not stop is aging. Each month passes increases your premium quote. I recon Deepak Shenoy said somewhere in recent blog that term insurance premiums may come dow in future, but its not guaranteed. and even if it comes down somewhat it may still be higher than what you will pay today.

    yay yay, you get some policies cheaper online but the is difference very marginal compared against one’s monthly telephone/fast food bills. Think in worst case if the insurance is to be claimed after the insurer has demised, what you expect? Claim to be rightly settled reliably or unreliably? Would you take chance on that?

    Now thats just my two cents. Anyone can differ on this.
    decide fast and act on it.

  12. jitendra solanki says:

    Look at all options..

    When i compared i Found Kotak cheapest at age 30 an dbelow.

    Above 30 iterm and iprotect come cheapest.

    Even Birla HNI Term Plan comes cheaper once you have medical test.The process is they take your proposal at higher rates.Once your medical test are done they reduce the rates if found very good medical history.

    So My suggestion would be to check rates at Kotak,ICICI,Birla, and MX New York( they are suppose to coem out with a plan with very less term rates) apart from online.

    In all above i found kotak the cheapest term plan offline.

  13. Manish Bansal says:

    Birla Dream Plan is Very Good Option
    at Low Premium

  14. J says:

    Firstly, Thanks a lot to all of you for your valuable inputs. How can anyone find out that a company is better then the other. My research shows that LIC is the best. But the date available at the IRDS website doesn’t segregate whether the claims were for Term policies or Endowment, etc….any suggestions.

    Note : All u guys, specially manish rocks….for this movement 🙂

    Thanks!

  15. rakesh says:

    Avoid Iprotect and Iterm plan, their customer service is very pathetic. I had taken term plans from both the companies but canceled. Instead look at SBI or Kotak for that matter, you already have LIC, stick to it. Even though premiums are high you will have a sense of relief and your family members will not have to run from pillar to post incase of any claims in future.

    Rakesh

    1. JayaprakashReddy says:

      @rakesh, can you give more info about the problems you faced from iTerm, also reasons behind canceling if possible. That will educate others as well.

  16. Kotak is a good offline option

    Manish

    1. krishna says:

      HI Manish

      kotak started online eterm /e-pref term .

      I want experts to give the opinion.

      Reg
      Krishna

      1. Krishna

        I have not looks at it for now . it does support only IE , which I dont have

        Manish

  17. Punit Gohil says:

    I suggest you to go for ICICI Pru iprotect & ageon religare term insurance plans but they are provided only for the users from selected city.

    1. JayaprakashReddy says:

      Aegon religare iTerm policy is cheapest in the market and available only online.

  18. SBI life premium is higher than ICICI Pru iprotect & ageon religare term insurance plans. Since, these plans are available ONLY online, you need to be in touch with customer care department of respective companies from time to time till your get your policy bond. It may take some time as they can not provide doorstep facility like your insurance agent.

    But still, these companies can be considered. When in problem, email them. They respond quickly through email & you get written proof also for your queries.

    Hope it will help you.
    MoneySavingsHelp

  19. Hemant B says:

    First check the Death claim settlement ration of the companies, this should be main factor of decision.

    1. JayaprakashReddy says:

      @Hemant, how can we check this claim ratio with the companies which are new into market and offering cheaper and pure term policies instead of the masala policies offered by old companies?

    2. Sagar says:

      How we will get the data of Death claim settlement ration of the companies?

  20. Sohil says:

    Their is a thread on this site about icici prudential and aegon .CHeck that thread

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