What is the meaning of Term Insurance?
Term Insurance is the type of Life Insurance. If death occurs of the policyholder during the policy period, then his/her nominee will receive the Sum Assured selected. If policyholder survives till the end of the policy period, then he/she will not receive any maturity amount.This is the reason, these policies cost you very less and cover a large amount of life risk. This is the PURE LIFE INSURANCE. Hence, anyone who have financial dependents must buy this product immediately.
What are the advantages of online Term Insurance Plans?
Nowadays all Life Insurance companies offer you online term insurance plans. The advantages of online term plans are as below.# It is convenient to buy as with the click of a button you can buy it.
# As there will not be any middlemen involved, the price is cheap than offline term insurance plans.
# You fill the proposal form on your own. Hence, an error of margin is LESS.
# Undue influence by agents is not there.
# Along with the discount of DIRECT purchase, if you buy through online then now life insurance companies will give you 8% on your FIRST YEAR PREMIUM. This is to promote cashless online transactions.
Top 5 Best Online Term Insurance Plans in India in 2018
Now let us shortlist the Top 5 Best Online Term Insurance Plans in India in 2018. How I selected the Top 5 Best Online Term Insurance Plans in India in 2018?
# How old are the companies
# Claim Settlement Ratio
# Premium Cost
# Plan Features.
How old are our Life Insurance Companies?
Below is the chart which explains the age of all life insurance companies. I am comfortable with the company which is at least 10 years old.You notice that among 24 Life Insurance Companies, only 16 companies completed 10 years or more. Therefore, my target is among these 16 companies only.
The reason behind this criteria is that Life Insurance is a long-term contract between you and insurance company. Hence, the older the company the more comfortable I feel.
IRDA Claim Settlement Ratio for 2017-18
However, for the better understanding purpose, I am putting the data again in this post.
Here, you notice that I marked with green colour who have claim settlement ratio of above 90%. I marked few companies in yellow whose claim settlement ratio is between 89% to 80%. I marked few companies in red whose claim settlement ratio is below 80%.
The common companies between the age of companies and claim settlement ratio are as below.
LIC, ICICI, HDFC, SBI, Bajaj, Reliance, Max Life, Sahara, and Tata. Among these 9 companies, I have to shortlist the Top 5 Best Online Term Insurance Plans in India in 2018.
Premium Cost of Term Insurance Plans
Now I will consider an example of a person whose age is 30 years, Term of Plan as 30 years, Non-Smoker and healthy, Sum Assured Rs.1 Cr and yearly premium payment. I selected plain vanilla product without any riders or further features.
Among the 9 companies, I found that Sahara not offers online term plan. In Tata Life, I not found a plan which is ONLINE, Sum Assured Rs.1 Cr and simple plain vanilla plan. Hence, I discarded those two companies. Now remained are only 7 companies.
You noticed that Max Life seems cheapest and followed by Reliance and ICICI. The costliest among these is LIC.
Now let us look at the plan features and decide which are the Top 5 Best Online Term Insurance Plans in India in 2018.
You notice that there is no positive point to decide LIC. However, because of oldest company and trust it created among Indians, I will shortlist the final Top 5 Best Online Term Insurance Plans in India in 2018 as below.
LIC’s eTerm
ICICI Pru iProtect Smart
HDFC Click2Protect Plus
SBI Life eShield
Max Life Online Term Plan.
Remember, there is no specific reasons to reject another two companies from the list. But considering the reliability and strong data, I shortlisted these 5 products.
Few points to consider while buying term insurance
# Never rely on Claim Settlement Ratio
Claim Settlement Ratio is raw data. This data will not give you enough picture of what type of products the insurance companies settled. Hence, relying too much on this single data and selecting a product is not a good idea.
# Quantum of Life Cover
Ideally one must have at least 15-20 times of your yearly income. This is the basic calculation.
# Fill the data properly
Sharing data especially materialistic information must be accurate. If you are unable to understand anything, then immediately contact Life Insurer for the help. Understand the questions and fill only when you know what you are filling.
# Never allow someone to take over your decision
Never budge on the decision which is against your wish. If you are fully comfortable, then only go ahead and buy.
# Term of the policy
Ideally, it should be up to your retirement age. Because you retire when you are financially free. Hence, Life Insurance is not required during your retirement age.
# Splitting of Term Insurance
There are few who are apprehensive of relying on a single insurer. Hence, they try to split among few. But in reality, there is no logic in splitting. What is the guarantee that the all insurer will accept or reject the claim?
# Stay away from riders
Never combine Life Insurance with General Insurance requirement. You will get better-featured covers from general insurers regarding accidental and critical illness covers. Hence, simply avoid riders.
# Never heed the aggregators choice
Nowadays there are so many online aggregators. You may not know that they act exactly like insurance agents. Hence, never rely on their claim. Do your own research. If you are satisfied, then only go ahead and buy.
# Know about Sec.45 of Insurance Act
After the recent clarification about Sec.45 of Insurance Act, the customer became king. It states “No policy of life insurance shall be called in question on any ground whatsoever after the expiry of three years from the date of the policy, i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.”
# Review your life insurance cover
Buying Life Insurance of Rs.1 Cr or Rs.3 Cr is not a one-time affair. You must review your life insurance requirement at least once in the 5 years. If required, then you must increase the sum assured.
# Be cautious with premium payment
In case of term insurance you have to be very cautious when it comes to premium payment. It is always better to opt for yearly premium payment and also if possible make it automated by the way of ECS. If policy lapses due to your negligiancy, then you have to undergo medical tests and all stuffs once again. If there are any health issues, then insurer may reject to renew the policy.
Also, during buying new policy insurance companies bear the cost of medical examination. However, during the renwal of the same, you have to bear the cost. Hence, becareful with premium payment of term insruance.