Best Term Insurance Plan in India 2015

A lot of my friends and relatives ask me which is the best term insurance plan in India. Many of them want to buy term life insurance online, and are not sure whether it is safe or how to go about it. In fact most people ask me these basic questions.

  • Why should I buy term life insurance at all since I will not get any money back?
  • Instead of buying term life insurance, is it not better to buy a money back policy or an endowment plan?

I will try to answer all these questions and intend to cover a lot of ground.

Topics which I will cover in this article are.

  • What is Life Insurance?
  • What are different types of life insurance in India?
  • What is term life insurance?
  • How to buy term life insurance online?
  • Finally I will compare term insurance plans in India and tell you which is the best Term Insurance Plan in India at this moment, based on a proprietary Scoring Model developed by me.

Hopefully after you go through the comparison of some of the best life insurance plans in India a lot of your doubts on term life insurance plans will be clarified.

At the onset let me state two things.

  1. I am NOT affiliated to any Financial Services or Insurance company and I am not trying to sell any online term plan. I am providing this information on top term insurance plans in India, only for educational purpose and from public sources only – it will be learning for both me as well as readers. If you have any comments or observations or find anything wrong in my analysis, please let me know. I am always eager to learn from my readers.
  2. There is NO single best term insurance plan in India. Each online term insurance plan has its pros and cons. However, there are certain term plans in India which are more popular and more beneficial than others based on some specific criteria, which I will discuss.

Ultimately : Please consult with your Financial Adviser before you buy term life insurance online.

So without further ado let us start.

What is Life Insurance?

First let us understand what life insurance is. I have talked about it earlier in my article “Life Insurance Brief Introduction” . However for the sake of completeness I will touch upon the definition and basic concepts of life insurance.

Life Insurance is a financial product that offers financial protection to a person’s family if he dies. Life Insurance is a contact between a person (the Insured) and a company (the Insurer).

  • The person pays a sum of money known as premium to the Insurer.
  • In return the insurer promises to pay the person’s family or beneficiary a certain amount of money known as “Sum assured” if the person suddenly dies.

What are different types of life insurance in India?

There are different types of life insurance policies in India. I have talked about them earlier in my article “Types of Life Insurance in India“.

Term Insurance

In a term insurance policy a person has to pay a premium to the company every year for his specified chosen period. If he dies during the period of the policy, his beneficiary will get the full sum assured. If he survives, he will not receive any benefit.

Endowment Policy

In an endowment policy, if a person dies during the period of the policy, his beneficiary will get the sum assured. If he survives the policy tenure, he will generally get back all the premiums paid, along with benefits like bonuses.

Money Back Life Insurance Policy

Money back policy is a variant of an endowment policy which offers the payment of partial survival benefits when the insured is still alive.

Whole Life Policy

A whole life policy covers a person for his entire life from the time the policy is taken.

Group Life Insurance

A group life insurance is an insurance policy where a group of people have been named under a single policy.

Unit Linked Insurance Plan

Unit Linked Insurance Plan or ULIPS are an insurance product where the insured person’s money is invested with the intention of earning additional income. ULIPs are supposed to provide a combination of life cover along with an opportunity for wealth creation.

What is term life insurance?

As explained above in a term insurance policy a person has to pay a premium regularly, and if he survives, he will not receive any benefit. In other words a term policy has no survival benefits. In some instances, term polices may have some additional riders, but by and large term policies are plain vanilla insurance products like fire insurance or motor insurance.

It is important that we clearly understand the difference between insurance and investment.

As insurance is essentially a product for protecting ourselves against risk. We pay money to a third-party regularly to ensure that if something bad happens, we can make good our losses. If nothing bad happens, we should be happy. But to ensure our happiness we need to pay a small price, that is insurance. There is no question of earning money.

Investment on the other hand is a process where we deploy unused cash in productive assets so that we get more money than what we started with.

Hopefully now it should be clear why you should buy term life insurance despite not getting any money back. Personally I think it is not better to buy a money back policy or an endowment plan, instead of buying term life insurance, because we should never mix investing and insurance.

Jagoinvestor has discussed some frequently asked question on Term Insurance in this article “9 most asked questions about Term Insurance“. It will definitely clarify a lot of your doubts.

How to buy term life insurance online?

Term life insurance plans in India are available in online mode as well as offline mode. In today’s age people generally prefer online mode as it is cheaper than offline term insurance and much more convenient. Most of the websites are very friendly and it is actually very easy to buy term life insurance online. In other words, the steps of how to buy online term insurance are very easy.

What is more important is the evaluation framework to be used when you compare term insurance plan in India and decide the best term plan policy to buy. To do that there are 3 parameters as below.

  1. Claim Settlement Ratio.
  2. Solvency Ratio.
  3. Premium for Comparable Sum Assured.

Claim Settlement Ratio

Moneycontrol defines Claim Settlement Ratio as below.
“Claim settlement ratio in the case of life insurance refers to the number of claims that the insurer has paid following the death of policyholders. Thus, if a life insurer has a claims settlement ratio of 60 percent, it means that the insurer pays 60 out of every 100 claims filed when the policyholder dies.”

Claim Settlement Ratio is a very important factor while deciding which insurer to choose. If the sum assured is not paid to a person’s beneficiaries when he dies, then the entire purpose of Life Insurance is defeated. It is especially important, when the beneficiary depends on the money for their livelihood in the absence of the deceased.

The higher the claim settlement ratio, the better it will be for the insured person. LIC in India has one of the highest claim settlement ratios of 98.14% as per IRDA data for 2014.

The below table provides a list of 24 Life Insurance Companies in India along with their claim settlement ratios.

Best term insurance plan in India - Claim Settlement Ratio

Please note that the ratios above are for all life insurance products and not only for term life insurance plans.

To know more about Claim Settlement Ratios, do read this informative but dated article from Morningstar called “What is a Claim Settlement Ratio?“.

Solvency Ratio

Solvency Ratio is a measure of how financially sound an insurance company is and how likely it is to settle its claims if the company fails. It is a measure of the company’s long term survival and should be viewed in conjunction with other factor as well.

The below table provides a list of 24 Life Insurance Companies in India along with their Solvency Ratios.

Best term insurance plan in India - Solvency Ratio

Please note that the ratios above are for the entire company and not only for term life insurance plans.

Now I shall discuss the salient features of different online term insurance plans in India.

Online Term Insurance Plans in India

LIC Online Term Plan

  • LIC e-Term Plan is a term life insurance policy.
  • Proposal on own life ONLY will be considered.
  • If you smoke /use tobacco, your premium will be roughly 25-30% higher than that of a non- smoker.
  • For details please go through LIC e-Term Plan website.
  • I have earlier provided a review of LIC e Term Plan.

ICICI Prudential Life Insurance online term plan

ICICI Prudential Life Insurance Company (ICICI Prudential Life) is a joint venture between ICICI Bank Ltd., and Prudential plc, a financial services group headquartered in the United Kingdom.

  • ICICI Pru iProtect a non-participating term assurance plan.
  • Special premium rates for non-tobacco users.
  • Additional payout on death due to an accident (Option II).
  • For more details please go to on ICICI Pru iProtect website.

HDFC Life Online Term Insurance Plan

HDFC Life is a joint venture between Housing Development Finance Corporation Limited (HDFC), and Standard Life plc, a financial services firm in the United Kingdom.

  • HDFC Life Click 2 Protect Plus is a term insurance plan in India.
  • Comes with Extra Life Option (Accidental Death Benefit, Income Option and Income Plus Option.
  • Under Life Stage Protection Feature there is an option to Increase Insurance Cover on certain key milestones of Life like Marriage, Child Birth without fresh medical test.
  • lower premium rates for non-tobacco users.
  • For details please go through HDFC Life Click 2 Protect Plus website.
  • Premium rates are given here.

Max Life Online Term Plan

Max Life Insurance, is a joint venture between Max India Ltd. and Mitsui Sumitomo Insurance Co. Ltd.

  • MAX Life Online Term Plan Basic Life Cover is a Pure Term plan that provides ONLY death benefit and NO maturity benefit.
  • Additional protection through Max Life Comprehensive Accident Benefit Rider.
  • Low premium rates for non-smokers.
  • For details please go through Max Life Online Term Plan website.

Star Union Dai-ichi Online Term Plan

Star Union Dai-ichi Life Insurance Co. Ltd. (SUD Life) is a joint venture (JV) of Bank of India, Union Bank of India and Dai-ichi Life, a leading life insurance company of Japan.

Bajaj Allianz Online Term Plan

Bajaj Allianz is a joint venture between Bajaj Finserv Limited (recently demerged from Bajaj Auto Limited) and Allianz SE.

  • Bajaj Allianz iSecure is a non-participating term assurance plan.
  • Bajaj Allianz iSecure provides separate sets of premium rates for sum assured less than 20,00,000 and for sum assured of 20,00,000 & above.
  • Special premium rates for non-smokers and for medically fit non-smoker.
  • Option to take an Individual or a Joint Life policy.
  • Option to take death benefit in annual installments.
  • For details please go through the Bajaj Allianz iSecure brochure.

SBI Life Online Term Insurance

SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Cardif.

  • SBI Life – eShield is an Individual, Non Linked, Non Participating pure term plan.
  • Special Rates for non-Smokers.
  • Additional benefit of Accidental Death Benefit.
  • For details please go through SBI Life – eShield website.
  • I have earlier provided a review of SBI Life – eShield.

Kotak Mahindra Online Term Insurance

Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture between Kotak Mahindra Bank Ltd., its affiliates, and Old Mutual.

  • Kotak Preferred e-Term Plan is a pure risk cover plan.
  • Special reduced rates for non-tobacco users and ladies.
  • Option to choose Plan Options as per suitability i.e. Recurring Payout or Immediate Payout.
  • Optional Kotak e-Accidental Death Benefit Rider.
  • For details please go through the Kotak Preferred e-Term Plan product brochure.

IDBI Federal Life Insurance Online

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, Federal Bank, and Ageas, a multinational insurance company based out of Europe.

  • IDBI Federal iSurance is an Online Term Insurance Plan.
  • In addition to the life cover, one can choose the Accidental Death Benefit option.
  • Medical test at one’s doorstep.
  • Discounts for high sum assured.
  • Special discounts for women.
  • For details please go through IDBI Federal iSurance brochure.

Metlife Online Term Insurance Plan

  • MetLife Mera Term Plan is a non-linked non-participating term plan.
  • Joint life benefit to cover spouse in the same policy.
  • Flexibility to increase life cover.
  • Coverage till the age of 75.
  • For details please go through MetLife Mera Term Plan brochure.

Tata AIA Online Term Plan

  • Tata AIA Life Insurance iRaksha Supreme is a non linked non participating, term insurance plan.
  • Preferential Premium Rates for non-smokers.
  • Female customers can avail the benefit of lower rates.
  • Rate benefits for customers opting for higher level of protection (Sum Assured of Rs 75 Lacs & above).
  • For details please go through Tata AIA Life Insurance iRaksha Supreme brochure.

Bharti Axa Online Term Plan

  • Bharti AXA Life eProtect is a simple online term insurance plan.
  • Family Care Benefit as part of the life insurance benefit.
  • Non-smokers get premium discounts on the term insurance policy.
  • Cover up to 75 years of age.
  • For details please go through Bharti AXA Life eProtect brochure.

Birla Sun Life Term Plan Online

Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group and Sun Life Financial Inc., an international financial services organisations from Canada.

Canara HSBC Online Term Plan

Canara HSBC Oriental Bank of Commerce Life Insurance is jointly owned by Canara Bank and Oriental Bank of Commerce and HSBC Insurance (Asia Pacific) Holdings Limited, the Asian insurance arm of HSBC.

  • Canara HSBC eSmart Term Plan is a pure Life Insurance Plan.
  • Option to cover accidental death.
  • Special discounted rates for non-smokers.
  • Special discounted rates for ladies.
  • For details please go through Canara HSBC eSmart Term Plan brochure.

Aviva Online Term Plan

Aviva Life Insurance Company India Limited is a joint venture between Dabur Invest Corp and Aviva International Holdings Limited – a UK based insurance group.

Exide Life Insurance Term Plan

Exide Life Insurance Company Limited (formerly ING Vysya Life Insurance Company Limited) commenced operations in 2001-02 and is head quartered in Bengaluru. The company is 100% owned by Exide Industries Limited.

  • Exide Life My Term Insurance Plan is a pure term insurance plan.
  • Life cover starting 25 lakhs to 25 crore.
  • Terminal Illness Benefit.
  • Adding riders for life, accident and health.
  • For details please go through Exide Life My Term Insurance Plan website.
  • For premium rates see this file.

Reliance Life Online Term Plan

  • Reliance Online Term is a non-linked, non-participating, term insurance plan.
  • Lower rates for non-smoker.
  • Medical tests done at doorstep (except treadmill test).
  • For details please go through Reliance Online Term brochure.

Aegon Religare Online Term Insurance

AEGON, an international insurance, pensions and asset management company, Religare, an Indian diversified financial services groups and Bennett, Coleman & Company, an Indian media conglomerate, have come together to launch AEGON Religare Life Insurance Company Limited (ARLI).

  • AEGON Religare iTerm comes with a Terminal Illness benefit.
  • Inbuilt Accidental Death Benefit.
  • Cover up to age of 75 years.
  • Covers all forms of death, even terrorist attacks
  • Additional riders – critical illnesses, illnesses pertaining to women and total and permanent disability.
  • For details please go through AEGON Religare Term Insurance Plan brochure.

Future Generali Online Term Plan

  • Future Generali Flexi Online Term Insurance Plan provides life cover up to the age of 75 years.
  • Lower Premium Rates For Women.
  • Comes in a Fixed Income and Increasing Income Protection option.
  • For details please go through Future Generali Flexi Online Term Insurance Plan website.

India First Online term insurance

IndiaFirst Life Insurance Company is a joint venture between Bank of Baroda, Andhra Bank and Legal and General (UK).

  • IndiaFirst Anytime Plan is an Online Pure Protection Plan.
  • Life cover for a period of up to 40 years.
  • There is no maturity or survival benefit payable under this plan.
  • For details please go through IndiaFirst Anytime Plan brochure.

In the next section I will provide online term insurance policy comparison of some of the top Insurers in terms of various parameters like Claim Settlement Ratio, Solvency Ratio and Premiums.

Online Term Insurance Comparison

Now that we have gone through the various features of online life insurance term plan of all the major Life Insurance players in India, let us put this all together.

The table below shows Top 20 Life Insurance Companies in India along with

  • Claim Settlement Ratio
  • Solvency Ratio
  • Online Term Plan Name
  • Premium of 30 year Old non-smoker male for Sum Assured of 1 crores for 30 years.

Best term insurance plan in India - Premiums for 30 years male for 1 crore Sum Assured 2

As you can see, on the one hand companies like MaxLife, Bharati Axa and Kotak Mahindra offer really low premiums, while on the other hand LIC, SBI Life and Exide Life have much higher premium (almost double) for Rs 1 crore coverage for a 30-year non-smoker male.

However the premium along should not be the only deciding factor in which online term plan to choose. You should also look at reputation, vintage, size and a host of other factors.

Do make it a point to discuss all this in detail with your Financial Adviser.

Best Term Insurance Plan in India based on Model

Finally I present to you my view of the best term insurance plan in India.

It is Max Life Online Term Plan Basic Life Cover with a score of 85 out of 100. Here are the top 5 companies:

  • Max Life – 85
  • Bajaj Allianz – 78.5
  • ICICI Pru – 76
  • LIC – 72
  • Kotak Mahindra – 63

The scores are derived from a proprietary Scoring Model developed by me, which is based on 5 factors.

  1. Reliability Factor based on Claim Settlement Ratio
  2. Size Factor based on Asset Under Management
  3. Cheapness Factor based on Indicative Premium of 30 year old non-smoker male for 1 Crore Sum Assured
  4. Longevity Factor based on Solvency Ratio
  5. Customer Focus Factor based on Grievance Redressal %

I am presenting the scores for Top 20 Life Insurance Companies below. Please note that that this is a rank based model and should be viewed relatively and not in absolute terms.

Online Term Insurance Comparison India 2015

That’s it!

Thank you for reading about best term insurance plan in India. Hope you enjoyed it. Do share your views / opinions / feedback.

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A Few Last Words

Before making any investment decision, please contact your financial adviser. I have provided this article for educational purpose only.

I hope you found this article on Best Term Insurance Plan in India. If you have something to add please leave a comment in the post. Please feel free to contact me.

Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

5 thoughts on “Best Term Insurance Plan in India 2015

  • January 8, 2016 at 11:59 am
    Permalink

    I am 32 years old and need a term insurance for 1 CR. I am really confused between Max life and ICICI Prud.
    Premium does not matter as Max has less premium than ICICI. Kindly suggest me which i can opt and If any specific reason for that.

    Reply
    • March 27, 2016 at 3:29 pm
      Permalink

      Sir, as mentioned in the post, I am not a Financial Adviser and do not provide any Financial Advise. Request you to get in touch with a Registered / Certified Financial Planner.
      Academically speaking, there is not much difference between them.

      Reply

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