Which Company's Term Insurance is the Best?

Introduction

There are over two dozens of life insurance companies in India and they offer various highly competitive term plans, making term insurance plans a commodity. Among all these plans in offering, it is imperative to select the company that is offering best term insurance plan. There are certain parameters which are very crucial in determining the affordability, effectiveness and meeting the ultimate goal of term policy. The term ‘Best’ is subjective since the requirement varies from one person to another. Still, one can compare the different parameters and decide the best term insurance plan that will cater their requirement in the right way.

Parameters to compare for determining the Best Insurance Company

·         Claim Settlement Ratio – This is probably the most important criteria to decide about an insurance company. If the situation may arise, the sole purpose of term insurance is to get the sum assured when the beneficiary claims for it. To make it easy to understand what claim settlement ratio is, Insurance Regulatory and Development Authority came up with the formula. This is the ratio of ‘Total number of claims settled’ and ‘Total number of claims made’.  Customers can use this formula using the claim data of the company and take decision.  Higher claim settlement ratio makes an insurance company an insurer of choice.  

                However, there are certain criteria which can affect the claim settlement ratio for the company. In such scenario, claim settlement ratio can be lowered though the company may  not be at fault. Customers need to be aware of these kind of unacceptable claims that affects the claim settlement ratio of the company and should take unbiased decision. The factors that leads to rejection of claims are:

o   Fraudulent claims made

o   Data Misrepresentation like sharing wrong information or lack of information in the application from by the insured

o   In case Nominee is not present at the time of claim settlement. Also if there are more than one nominees make the claims, insurer will not attend these disputes. And parties should settle the dispute before the claim is made

o   The policy contract should be understood thoroughly to know the terms and conditions to avoid claim rejection

·         Rider Benefits – Riders allow to avail the wider benefits in term insurance. There are certain insurance companies who offer certain exclusive riders whereas other insurers offer common riders. So, The selection of insurance company could be based on choice of Riders as well

·         The Sum Assured –  One must  consider the debts and liabilities and inflation as well as income replacement in case of death of insured to cover the family expenditure. Generally it is calculated as: Annual income of the insured multiplied by 10 or 15 PLUS the Liabilities/ Loans (if applicable)

·         Premium Rate – A comparison of premiums should be done before deciding on the insurer and the policy. However, premium alone should not be considered. Because, for the same sum-assured, if insurer is charging high, then there is possibility that the company has higher claim settlement ratio, which is preferred even though premium rate is slightly higher

Best Term Insurance Plan

The requirements for term plans differ from one individual to another based on their age, duration of coverage needed, requirement of the death and maturity benefits, requirement of the riders and so on.  While the best term insurance companies in India typically showed higher claim settlement ratio, there are other features which also play important role in determining whether a plan is superior to others. Based on the term plans offered, the insurers also secure a position in the market accordingly.   Therefore, it is not possible to assign one term plan to be the best. However, based on the claim settlement ratio and the rider benefits, there are several insurance companies that stood out with certain term plans in recent years.

(1) Best Insurance Companies based on Claim Settlement Ratio

Insurance Company	Claim Settlement Ratio
Life Insurance Corporation of India	98.31%
MAX Life	97.81%
HDFC Standard	97.62%
AEGON Life	97.11%
SBI Life	96.69%
ICICI Pru Life	96.62%
Exide Life	96.40%
TATA AIA Life	96.01%
Canara HSBC	94.95%
Birla Sun Life	94.69%
Reliance Life	94.53%
Edelweiss Tokio	93.29%
Bharti AXA Life	92.37%
Bajaj Allianz	91.67%
Kotak Mahindra Life	91.24%

*This data is of 2015-2016 and most recent for Claim Settlement Ratio category

(2) Best Insurance Company based on Rider Benefits

Term Plan	Entry Age (Min & Max) in years	Policy Term (Min & Max) in Years	Riders
			Accidental Death Benefit	Critical Illness Benefit	Terminal Illness	Premium Waiver
AEGON Life iTerm Plan	18-65	5-40 (or up to 80 )	Paid	N/A	Free	Paid
Aviva Life Plan	18-55	10-35	N/A	N/A	N/A	N/A
Bajaj Allianz eTouch lump sum	18-65	10-40	Paid	Paid	N/A	Free
Birla Sun Life Protect @ Ease Income Lump sum	18-65	5-40	Paid	Paid	Free	N/A
Canara HSBC OBC iSelect Lumpsum	18-70	5-40	Paid	N/A	Free	N/A
Edelweiss Tokio Life TotalSecure+	18-65	80	Paid	Paid	N/A	Paid
Future Generali Flexi Online term	18-55	10-65 (non-smokers); 75 (Smokers)	Paid	N/A	N/A	N/A
HDFC Life click2Protect Plus	18-65	10-40	Paid	Paid	N/A	N/A
ICICI Prudential iProtect Smart	18-60	5-40	Paid	N/A	Free	Free
IDBI Federal iSurance Flexi Lump Sum Plan	18-60	10-62	Paid	Free	N/A	N/A
LIC E-term Plan	18-60	10-35	N/A	N/A	N/A	N/A
Max Life Online term Plan Plus	18-60	10-40	Paid	N/A	N/A	Included
PNB MetLife Mera Term plan	18-65	5-40	Paid	Paid	N/A	N/A
SBI Life eShield Plan	18-65	5-30	Paid	N/A	N/A	N/A
TATA AIA iraksha Supreme	18-70	10-40	N/A	N/A	N/A	N/A

* Rider Benefit data is of 2018

Conclusion

A lot of term insurance plans are available in India from both private and public sector insurance companies. There are several parameters to consider to narrow down to the best term insurance from a company. The settlement ratio, premium, maximum and minimum age covered, diverse range of riders offered, etc. all certain factors that constitute the basis for selection. The huge volume of data for each insurance company is available for comparison but not everyone can come to a decision from those. So many times taking professional help in identifying the best term insurance plan is a good idea. For others, best plan decision could be taken by analysing available data and reviews merged with insurance needs and personal investment requirements. However, the claim settlement ratio is by far the most defined and easiest way to compare the term plans.