Term insurance is the pure form of life insurance, wherein the
policyholder pays a premium to cover his/her death risk for a particular sum of
money for a particular term i.e.15, 20, 25, 30 years and so on . On demise of
the policy holder within the term, the nominee (the beneficiary) is entitled to
get the sum assured in lump sum or deferred manner as mentioned the policy
contract. If the policy holder survives the term he is entitled to no payment/ #maturity benefits. This policy is highly recommended for the earning members of
the family with dependants.
What is an
ideal life insurance amount for you?
While choosing an ideal #insurance product, one need to do basic calculation
of future monetary requirements based on the laid out financial goals, it
cannot be a guess work.
Please write down the present costs you would incur for the
following purpose
- Elderly parents to look after
- Present age of children and their future needs for education
- Do you have a working spouse? If not, her lifelong expenses on health and living
Though exact cost you may not be able
to arrive at, please click to find the future costs (inflation)
and expenses of education, marriage, living standards etc.Adding up these costs would help you arrive
at the right amount, your ideal insurance cover. Still, if you are confused, multiply
your yearly income with 10. This should be your ideal sum insured.
Ex – If your yearly income stands at
10 lakh, sum insured should be Rs. 1 crore.
What
is the premium you need to pay for this insurance product?
The premium of a term insurance is calculated
on few factors.
1. Age of the applicant – With each passing birthday you would need to
shell out extra money as premium to buy a new policy, however, it remains the
same through the term. So, early entry gives you a good deal. Buy a term plan
before your next birthday to save on premium
2. Health of the applicant - It plays an
important role too. Two persons of same age may get different quotes for
premium depending on the medical history and current health of the applicant.
3. Lifestyle – For example there shall be
significant difference in premium for Smoker and a non-smoker of same age and
health.
4. Policy term – You may chose the policy
term depending on the offer and your needs, usually 10 -40 years, higher the
policy term , higher will be the premium
The reasons why you should buy term Insurance is peace of mind. It buys you a adequate protection at a very low cost.
Parameters
to chose the right insurance plan
For the
same amount of sum assured, different insurers would quote different pricing.
The points we should look at –
1.
Inclusions and exclusions – This means, what are the exact conditions to
be satisfied by the policy holders to receive the claim amount. Reason of death
is one point insurers look at very closely for the payment of claims. Insurers
may not cover unnatural deaths, suicide, death due to drug/alcohol etc.
2. Claim settlement ratio of the insurers – While
comparing premiums, one must not ignore the CSR. It indicates the percentage of
claims honoured on death of the policy holders in the particular year. A high
percentage makes the insurers more dependable
3. Additional
benefits – In addition to the basic life cover, insurance companies have
added many additional features like accidental death benefit, permanent
disability benefit, critical illness cover and deferred payment options to ease
the burden of the policy holders
Tax
Benefits on term insurance
On premiums paid and benefits received as per section 80C and 80D
of Income Tax Act,1961.
Disadvantages of term plans
1. No maturity benefit on survival
2. Policy may lapse on not honouring 30days grace period for
premium payment. And ou have to buy new
policy all together
Top
insurance companies based on claim settlement ratio 2015-16
|
Insurance Provider
|
Death claims received
|
Claim settlement ratio
|
Death claims paid
|
Claims pending
|
Per claim average value (Rs)
|
|
LIC
|
755,901
|
98.19%
|
742,243
|
0.5%
|
120,654
|
|
Max Life
|
9,223
|
96.23%
|
8,804
|
0.1%
|
278,816
|
|
ICICI Prulife
|
12,309
|
96.20%
|
11,546
|
0.8%
|
305,612
|
|
HDFC Std
|
12,189
|
95.02%
|
11,031
|
2.3%
|
238,890
|
|
SBI Life
|
14,876
|
95.70%
|
13,303
|
3.2%
|
229,572
|
|
Tata AIA Life
|
3,873
|
94.47%
|
3,659
|
1.0%
|
241,241
|
|
Star Union Daichi
|
1,266
|
94.08%
|
1,191
|
0.3%
|
285,306
|
|
PNB MetLife
|
2,466
|
92.90%
|
2,290
|
1.5%
|
448,821
|
|
Bajaj Allianz
|
20,661
|
91.30%
|
18,978
|
3.0%
|
183,291
|
|
Kotak Mahindra Life
|
2,686
|
90.73%
|
2,437
|
3.2%
|
296,143
|
|
AegonReligare
|
460
|
95.30%
|
413
|
0.2%
|
744,068
|
Top 5
basic online term insurance plans in India for #non-smoker, healthy female, age
30 years, Cover for 1 crore based on CSR, term and premium cost
|
Insurer
|
Policy Name
|
Policy Term
|
Premium
|
|
Max life Insurance
|
Online
Term Plus plan
|
35
years
|
Rs.
8970/-
|
|
Aegon Religare
(No. of policies claimed is very
less)
|
Aegon
Life iTerm Insurance Plan
|
35
years
|
Rs.
8395/-
|
|
ICICI Prudential
|
iProtect
Smart Lumpsum Plan
|
35
years
|
Rs.
11,900/-
|
|
HDFC Life
|
Click
2 Protect Plus
|
35
years
|
Rs.
11,630/-
|
|
PNB Metlife
|
Mera
Term Plan-Full Lumpsum payout Plan
|
35
years
|
Rs.
9258/-
|
The chart data source: Policybazaar
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