Best Term Insurance Plans in India
Before we start with our list of best term insurance plans in India, let us take a look at the meaning of term insurance. Many of you may already be aware of this insurance variant but still, it is good to have a quick brush-up.
So, what is term insurance?
Term insurance is actually term life insurance. It is one of THE MOST basic forms of life insurance covers provided by all insurance companies in India. Let us take a quick look at the features of a term life insurance plan in general:
- Term insurance will only offer life coverage. Nothing else is associated – no savings, no investment!
- It is usually purchased for a specific period of time like 10 years, 20 years or 30 years. In other words, this insurance policy will offer coverage only for the specified time period (also known as term and hence, term insurance).
- Premiums are usually charged on a yearly basis and remain unchanged throughout the term of the policy.
- If the insured person dies within that specific term, the sum assured or the coverage money is paid out to the beneficiary or beneficiaries.
- If however, the person does not die within that specific term, the insured person will either have to increase the term for the coverage or will have to let the policy expire.
- If the person decided to increase the coverage term, new premiums are to be paid at newly calculated rates. The older premium rates will no longer hold.
- In case the policy is set for expiry without further attempts for continuation or increase in coverage term, the insurance becomes null and void and insured person (and the nominees) are not entitled for any settlement payout or reimbursement of paid premium.
This is the most rudimentary form of insurance and works out well for everyone. However, the basic rules apply. The older the person is, the higher the premiums will be. The premiums will depend on health conditions, income, term chosen etc.
Now that we have a working knowledge of the concept of Term Insurance, let us take a look at the best term insurance plans in India for 2015. Note that we will be offering the list for best Online Term Plans instead of Offline Term Plans. The reason is simple. Online term plans are way cheaper than their offline counterparts.
1. e-Term– Online Term Insurance from LIC
The reason why LIC tops the list is that according to Claim Settlement Ratio data for FY 2013-2014, LIC leads the bandwagon with 98.1% settlements. The e-Term of LIC is 35% cheaper compared to Amulya Jeevan or Anmol Jeevan offline term plans. Compared to online term plans from private players in market, e-Term is expensive with yearly premium of ₹ 16,405 for sum assured or coverage of ₹ 1 crore. The minimum coverage allowed in ₹ 50 lakh. The coverage allowed under the online term insurance of LIC is applicable for people belonging to age group 18 and 75. This means, the insured person cannot be a minor or cannot exceed the age of 75 years. The minimum term available with e-Term is 10 years while the maximum coverage period is restricted to 35 years.
2. iProtect– Online Term Insurance from ICICI Prudential
With 94.1% Claim Settlement Ratio, this is one company that can be trusted. The yearly premium for ₹ 1 crore sum assured is ₹ 12,247. The minimum coverage allowed is ₹ 3 lakh. Minimum entry age allowed is 20 years and the coverage will be provided for a maximum of 75 years of age. Minimum and maximum policy terms allowed are 10 and 30 years respectively. The company allows a person to opt for Accidental Death Benefit along with the basic cover. The maximum Accidental Death Benefit allowed is ₹ 50 lakhs.
3. Click 2 Protect– Online Term Insurance from HDFC Life
Talking 3rd position on our list with Claim Settlement Ratio of 94%, Click 2 Protect can be purchased only if a person has attained 18 years of age and the maximum age till which the coverage works is 65 years. ₹ 1 crore coverage is assured against a yearly premium of ₹ 11,910. 10 years and 30 years are the minimum and maximum policy terms allowed under this plan. The minimum coverage allowed in ₹ 10 lakhs and the max coverage allowed is ₹ 10 crore.
4. Max Life Online Term Plan – Online Term Insurance from Max Life
Standing 4th on our list, Max Life has an impressive 93.9% Claim Settlement Ratio. This plan from Max Life allows a minimum coverage of ₹ 25 lakhs and a maximum coverage of ₹ 100 crores. However, for ₹ 1 crore coverage, the company’s asking premium rate is ₹ 8,314 for a year. Minors are not eligible, making 18 the minimum required age for the insured and the maximum age of the insured till which the insurance remains valid is 70. The minimum term available with Max Life Online Term Plan is 10 years while the maximum coverage period is restricted to 35 years
There are two more variants available with this plan:
- One can opt for a monthly income along with the basic cover provided. Yearly premium for this will be ₹ 10,100.
- The other variant asks for ₹ 11,100 yearly premium and in return, promises increasing monthly income. The basic coverage stays as is.
5. iSecure – Online Term Insurance from Bajaj Allianz
This one makes to the 5th position on our list because of 91.3% Claim Settlement Ratio. The company charges a premium of ₹ 13,438 in a year against a coverage of ₹ 1 crore. The minimum coverage the company allows is ₹ 20 lakhs. 10 and 30 are the respective minimum and maximum number of years of coverage allowed. Entry age for iSecure has to be 18 years and the policy will not cover anyone above the age of 70 years.iSecure also allows joint life coverage applicable only for spouse.
6. eShield – Online Term Insurance from SBI Life
With 91.1% Claim Settlement Ratio, SBI Life stands 6th on our list. The plan offers ₹ 1 crore coverage for a yearly premium of ₹ 13,135. The coverage allowed under the online term insurance of SBI Lifedoes not cover minors or people who are more than 70 years old. The minimum term available with eShield is 5 years while the maximum coverage period is restricted to 30 years. ₹ 20 lakhs is the minimum coverage amount (sum assured) assigned to this policy.
eShield has three more options:
- Level or Base Cover (as described above) can be tagged with Accidental Death Benefit.
- Increasing cover with a year-on-year compounded growth at 10% RI (rate of interest). This is applicable only after the policy remains active for 5 years. The insured person will not be required to pay additional premium for increasing cover.
- Increasing Cover tagged with Accidental Death Benefit.
7. Preferred e-Term – Online Term Insurance from Kotak Life
Taking 7th spot on this list, Kotak Life has 90.7% Claim Settlement Ratio. This plan allows a minimum term of 10 years and a maximum of 40 years. Minimum age of a person applying for this plan should be 18 years and the plan will not cover people above 75 years of age. Minimum coverage allowed under this plan is ₹ 25 lakhs. The yearly premium for ₹ 1 crore coverage is ₹ 8,287. Preferred e-Term has a feature known as ‘Recurring Payout’. This feature, if opted for, will pay a certain percentage of the sum assured to the beneficiaries in lump sum in the event of the death of the person insured. The remaining amount will be broken down in fixed amounts and paid out either every month or every year for a period of 15 years. The idea is to generate a steady income flow. This however doesn’t make sense because a fixed amount of money in a month will not have the same worth in 15 years from now as it has today!
8. iTerm Plan – Online Term Insurance from Aegon Religare
This company doesn’t really boasts a stellar Claim Settlement Ratio. With just 81% CSR, Aegon Religare still makes it to this list because this is the company that pioneered online term insurance. Two optional riders – (a) Critical Illness (henceforth referred to as CI) and (b) Accidental Death Benefit (henceforth referred to as ADB) – are offered by iTerm. As per policy rules, insured person will not be required to pay future premiums if he is diagnosed with any one of the listed critical illnesses. This is pretty interesting. As far as the basic plan is concerned, anyone who is 18 years old can apply for the plan but the plan will stop providing coverage to anyone who crosses the age of 75 years. The yearly premium charged for ₹ 1 crore coverage is ₹ 8,202. The minimum coverage allowed by iTerm is ₹ 10 lakhs. Minimum policy term that can be purchased is 5 years and maximum allowed is 40 years.
In a nutshell: All Term Insurance plans in tabular format
|Plan Name||Company||CSR (%)||Policy Term in years||Min Age||Max Age up to which coverage is provided||Sum Assured||Yearly Premium|
|e-Term||LIC||98.1||10||35||18||75||1 Crore||₹ 16,405|
|iProtect||ICICI Prudential||94.1||10||30||20||75||1 Crore||₹ 12,247|
|Click 2 Protect||HDFC Life||94||10||30||18||65||1 Crore||₹ 11,910|
|Max Life Online Term Plan||Max Life||93.9||10||35||18||70||1 Crore||₹ 8,314|
|iSecure||Bajaj Allianz||91.3||10||30||18||70||1 Crore||₹ 13,438|
|eShield||SBI Life||91.1||5||30||18||70||1 Crore||₹ 13,135|
|Preferred e-Term||Kotak Life||90.7||10||40||18||75||1 Crore||₹ 8,287|
|iTerm||Aegon Religare||81||5||40||18||75||1 Crore||₹ 8,202|
NOTE: For all policies mentioned above, the following assumptions are made for calculating the yearly premiums:
- Age of person applying for policy: 30 years.
- Gender of the applicant: Male
- Smoking status of applicant: Non-smoker.
- Sum Assured or Coverage purchased: ₹ 1 crore.
- The premium amount is only and only for base plan. CI and ADB riders are not accounted for.
- Variants of basic plans are not included in calculation of basic cover.
- Premium Mode: Yearly
In case any of the above factors change, the premiums will change accordingly.