Comparison of Term Insurance Plans

by Gopal Gidwani on November 17, 2010 · 89 comments

in Financial Planning,Insurance,Others,Uncategorized

Introduction

Ajay’s 2 year old son Manoj likes playing with aeroplane toys. Right from his childhood days Manoj aspires to become a pilot when he grows up. Ajay (29 years old) had a dream of making his son a pilot and he was saving money for his son’s education. Ajay’s dream made a crash landing when he unexpectedly died in a road accident. Ajay had taken an endowment policy with a Sum Assured of Rs 2 Lakhs. Ajay is survived by his wife, his son and his old parents who were dependent on him. Ajay’s endowment policy of Rs 2 lakhs won’t even take care of the family financial needs for 1 year. The entire family’s survival is at stake. Manoj’s education plans have gone for a complete toss. Manoj as a small kid is still playing with aeroplanes not realizing that his wings have been clipped even before they could grow!!!

So where and how did Ajay get his planning wrong? Ajay invested in an endowment policy and not in a term insurance policy. Had Ajay bought a term insurance policy he would have got an insurance cover of around 10 times more for the same premium. That would have taken care of the family for some years and Manoj’s education also wouldn’t have suffered. Term insurance policies are very cheap and don’t come with any returns on maturity.

Do you know that a 29 years old person like Ajay can get an insurance cover of Rs 50 Lakhs for 25 years for an annual premium of just Rs 5700 (inclusive of taxes). This is less than Rs 500 a month or less than Rs 20 a day for an insurance cover of Rs 50 Lakhs. In this article we will compare the term insurance policies of 4 companies.

Online Term Insurance Policies
Lot of insurance companies nowadays have started offering term insurance plans online. As there are no agents involved in online sale of these plans, the insurance company saves on the agents’ commission and returns this amount back to the customer in the form of cheaper premiums. Let us look at the premium comparison of online term plans offered by 4 insurance companies. These premiums shown in the below table are for a 29 year old person for Rs 50 Lakh term insurance cover for 25 years.

Company PlanPremium
Metlife Insurance – MetProtectRs 5150
Kotak – e-Preferred Term Plan Rs 5210
Aegon Religare – iTerm Plan Rs 5250
ICICI Prudential – iProtect Plan Rs 5350

All the rates are exclusive of services tax and education cess. So you can see a 29 years old person can get an insurance cover of Rs 50 Lakhs for 25 years for an annual premium of just Rs 5150 only !!! This comes to less than Rs 15 per day for a huge cover of Rs 50 Lakhs. In the scenario that we saw in the beginning of this article, had Ajay taken term insurance of Rs 50 Lakhs for an annual premium of just Rs 5150 p.a., then even in his absence his family would have survived for years and also Manoj’s education would not have suffered. But due to lack of poor planning on Ajay’s part his family is in doldrums in his absence. The scenario underlines the importance of having term insurance which normally many people don’t buy because a term plan does not give any returns on maturity.

Comparison of Features
Let us compare the other features of these plans

Company PlanMetlife Insurance – MetProtectKotak –

e-Preferred Term Plan

Aegon Religare –  iTerm PlanICICI Prudential – iProtect Plan
Minimum age at entry18 Years18 Years18 Years20 Years
Maximum age at entry60 Years65 Years60 Years65 Years
Maximum Maturity Age70 Years70 Years65 Years75 Years
Minimum Sum AssuredRs 25 LakhsRs 25 Lakhs10 Lakhs10 Lakhs
Maximum Sum AssuredNo Limit. Subject to UnderwritingNo Limit. Subject to UnderwritingNo Limit. Subject to UnderwritingNot Specified
Maximum Policy Term35 Years30 Years25 Years30 Years
Premium Payment FrequencyAnnual or Semi Annual or SingleYearly or Half Yearly or Quarterly or MonthlyYearlyAnnual
Minimum PremiumNot SpecifiedRs 1800 p.a.Not SpecifiedRs 2000 p.a.

Metlife Insurance – MetProtect Term Plan: Apart from the above mentioned features, if the proposer is required to undergo a medical check-up then the company medical team visits your place as per your convenience and conducts the medical tests at your place at no extra cost to you.

Kotak e-Preferred Term Plan

  • Apart from the above mentioned features the policy offers the insured the option to increase the life cover through the ‘Step Up Option’ during important events like Marriage, Purchase of House, Birth of Child, Policy Anniversary (1st, 3rd and 5th policy anniversary).
  • The policy also offers the option to reduce the life cover through ‘Step Down Option’.

ICICI Prudential iProtect Plan: Apart from the above mentioned features the policy comes in 2 options. Option I where the Death Benefit is equal to the Sum Assured. Option II comes with additional death benefit equal to Sum Assured or Rs 50 Lakhs (whichever is lower) in case of death due to accident.

Some Common Features
Some of the common features of all these policies are:

  • All these policies are available online.
  • The premium paid for all these policies qualifies for tax deduction under Section 80C of the Income Tax Act. The Sum Assured / Death Benefit paid to the nominee / beneficiary in case of death of the insured is tax free under Section 10 (10D) of the Income Tax Act.
  • There is no Maturity Benefit in these policies. These policies don’t have any paid-up value or surrender value.
  • Insurance companies / banks don’t give any loans against these policies.
  • Suicide Exclusion: If the insured person commits suicide within the 1st year of the policy then the policy will become void and the insurance company will not be liable to pay any claim.

Conclusion
There is not much difference in premium in the term insurance policies of the 4 companies, but the companies differ in the features offered. While iProtect from ICICI Prudential has the highest maturity age till 75 years, MetProtect from Metlife has the maximum policy tenure of 35 Years. While iTerm from Aegon Religare and iProtect from ICICI Prudential come with only annual premium payment option, MetProtect from Metlife comes with annual and semi annual premium options and ePreferred Term Plan from Kotak comes with annual, semi annual, quarterly and monthly premium payment option.

To conclude MetProtect from Metlife Insurance with the lowest premium and highest policy tenure of 35 Years and Annual / Semi Annual premium payment options scores slightly over the term plans of the other 3 companies. But then nothing makes the plans of the other 3 companies bad as compared to MetProtect. Whichever company you choose to buy term insurance from, all that matters at the end of the day is having Term Insurance. So do you already have Term Insurance? If not then STOP THINKING and START ACTING!!!

Please let us know your views on the article by commenting in the section below or writing to us at gopal_gidwani@yahoo.com

{ 89 comments… read them below or add one }

AKH November 17, 2010 at 5:44 pm

Always check and compare different companies before buying term insurance policy- For example a 41 year old male has a 40 lakh rupees term insurance policy cheapest in Kotak Mahindra’s ‘preferred term’ whereas a 50 lakh rupees term insurance policy for the same person is cheapest in Aegon Religare and not Kotak Mahindra.

Reply

Gopal Gidwani November 18, 2010 at 8:53 am

Hi AKH,
iTerm plan from Aegon Religare is designed in such a way that the premium reduces after 50 lakhs sum assured. Try calculating the premium for 49 lakhs and 50 lakhs and see the difference. The premium goes on gradually increasing till 49 lakhs and falls drastically at 50 Lakhs and then gradually goes on increasing beyond 50 lakhs as the sum insured goes on increasing.

Reply

Avinash Borse November 18, 2010 at 1:53 am

Gopal,

Great effort to compare & give out details of each Term Policy. Thanks for the info.

Regards,
Avinash

Reply

Gopal Gidwani November 18, 2010 at 8:53 am

Hi Avinash,
Thanks for the compliment ………. 🙂

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AKH November 19, 2010 at 5:22 am

Dear Gidwani ji,

Good digging of information about Aegon Religare in response to my comment.

Thnx

AKH

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Tanushree November 19, 2010 at 9:38 am

Hi Gopal,

Wanted to know about taxes that are incurred as a result of property sale.

Thanks
Tanushree

Reply

Gopal Gidwani November 22, 2010 at 5:56 pm

Hi Tanushree,
The gain realised from sale of property is known as Capital Gain. To calculate capital gain on property sale, following steps have to be followed
Short Term Capital Gain: If the asset is sold within 3 years of purchase then the profit realised is short term capital gain. The profit is added to your annual income and taxed as per the tax slab that the individual falls in.

Long Term Capital Gain: If the asset is sold after 3 years of purchase then the profit realised is long term capital gain. The way of calculating the long term capital gain is as follows
Selling Price of the Asset – (Indexed cost price of the asset + Cost of improvement + Expenses incurred at the time of sale of the asset)
The amount calculated from the above is the Long Term Captial Gain. The individual has to pay 20% tax on this. If the individual wants to avail exemption from tax then there is a provision under Section 54 wherein the individual can invest the capital gain amount into a Residential Property or in Bonds of NHAI or REC

I have just given you the gist of the provisions related to Capital Gains. I suggest you consult a Tax Consultant for a better understanding of this.
Best Regards
Gopal Gidwani

Reply

Deepak Agarwal December 5, 2010 at 6:42 am

Hello Gopal,

Really good research for the term plan..keep up the good work!!!

Regards

Deepak A

Reply

Gopal Gidwani December 6, 2010 at 11:44 am

Hi Deepak,

Thanks for the compliment. It was good to know that the website article was helpful to you ………. 🙂

Reply

Deepak December 5, 2010 at 2:20 pm

Hi,

Thanks for the information !!

Wanted to know for online term insurance , which insurance company is good in Claim Settlement.

Regards,
Deepak

Reply

Gopal Gidwani December 6, 2010 at 11:49 am

Hello Mr Deepak,
To know the claim settlement track record of insurance companies, you can visit the IRDA website. You will find the claim settlement ratio of all the companies there

Reply

Nandan Narula December 25, 2010 at 7:48 pm

A well researched and a very useful article. It gives us a complete picture of the entire Term Insurance space. 🙂

Reply

Gopal Gidwani December 26, 2010 at 8:03 am

Hello Nandan,

Thanks a lot for stopping by and reading the article. Do keep visiting regularly for more information………. 🙂

Reply

Rohit December 26, 2010 at 5:59 am

Hi Gopal,

Very Nice Information!!
For a beginner like me who don’t know much about online policies, this piece of article is very helpful. Although I have 2 Questions in my mind

1. I am 24 yrs old & working as a software engineer. I know about ICICI, its a well known name, Aeogon Religare i think a 2-3 yr old (correct me if i am wrong) company and i really dont know much about Kotak & Metlife.
Lets say i’m happy with all the four comanies & ready to give the premiums for anyone. But after giving premiums for 15 years what i dont want that the company which i opted,goes falls. I am looking for a trust factor. Suggest me the company i should go with (although, i find Aegon Religare a good option)

2. I want to take a policy of 75 Lakhs for 25 yrs. What would you recommend, 75 in 1 company, splitting it into 25:50 and then opt for 2 companies or 25:25:25 & 3 companies. I want to go for the 25:50 option but want your suggestions too.

Thanks,
Rohit

Reply

Gopal Gidwani December 26, 2010 at 7:10 am

Hello Rohit,

Its good to know that the article is useful to you. Regarding your 2 queries let me answer them one by one
1) Regarding the companies yes Aegon Religare is relatively new among all the other 3 companies. Aegon Religare is less than 3 years old whereas ICICI, Kotak and Metlife have been around since quite some time. Regarding Claim Settlement as per IRDA Rules every company has to set aside 150% money for the insurance business that they underwrite. This is simple terms means for every Rs 100 worth of insurance cover that these companies sell they have to keep aside Rs 150 for claim settlement. This is known as the Solvency Ratio. So every company has the required money to settle the claim. So it is not the question of whether they can settle the claim or not. It is the question of willingness on part of the insurance company whether they want to settle the claim or not provided that the insured person has disclosed everything honestly and correctly at the time of taking the insurance policy.
Also insurance is a very capital intensive business and requires huge start up capital and requires lot of capital on an ongoing basis. So people cant just one day wake up and decide to start a life insurance company. Also they cannot just simply close their life insurance business one fine day when they feel they have had enough of it or they cant do it any more. The insurance regulator IRDA has put in stringent guidelines for all these things to make sure only strong players enter this business for the long term and the interests of all the policyholders are protected.

2) Regarding splitting the cover among companies. Diversifying into 3 covers will be a little too much. So you can spread your insurance cover among 2 companies. You can go for Aegon Religare iTerm for Rs 50 Lakhs and for Metlife MetProtect for the remaining 25 Lakhs. I say Aegon Religare Rs 50 lakhs because the policy is designed in such a way that the premiums steadily go on increasing from 25 Lakhs and drastically fall at Rs 50 Lakhs and then again steadily go on increasing above 50 Lakhs.
Hope I have answered your questions.
Best Regards
Gopal Gidwani

Reply

Rohit December 26, 2010 at 8:52 am

Thank you so muhc Gopal, your replies are really very helpful. I was also thinking for the same, 50L Aegon & 25L Metlife 🙂

And yes its a time for STOP THINKING & START ACTING

Reply

Renjith February 16, 2011 at 4:13 am

Hi Gopal
Thanks for this informative article. I have a question : Does any of the plan you mentioned in the article comes with riders?
Regrds
Renjith

Reply

Gopal Gidwani February 17, 2011 at 3:05 pm

Hi Renjith,
Most of these plans come with riders like Accidental Death Benefit Rider, Critical Illness Rider and others. For more details on specific riders that come with specific term plans please refer to the brochures of these products on the respective company websites.

Reply

Vishwas February 16, 2011 at 6:07 pm

Dear Gopal,
I’m 40 yrs old.Want to buy Rs.7500000 term plan from Metlife (protect).i found its premium to be lowest.Whether this company is that trust worthy ?

Reply

Gopal Gidwani February 17, 2011 at 3:06 pm

Hi Vishwas,
Metlife has been around since quite some time. You can go for it

Reply

Roshan Kumar March 11, 2011 at 9:49 am

Here is my (bad) experience with Metlife:

Based on reviews of the plan, I applied for MetProtect online term insurance plan for Rs 25 lakhs for a duration of 35 years. I paid the premium by credit card and completed all the documentary requirements. The executives at Metlife even verified that my documents were in order and everything is perfect.

After a week or so I received a cheque as refund for the premium paid. I was taken by surprise as there was no communication prior to that suggesting that my application was rejected. I called Metlife and after going through 2 persons, I was told that i would get a call back, which never happened. I called after 3 days and was told that I should email the complaint which I did.

Now I receive a reply which I think is all gibberish since it doesn’t give any reason as to why my application was rejected. I expected a company like Metlife to behave in a more professional manner. Below is the text of my mail conversation with them (last mail first):

Dear Sangeetha,

I have read your spiel which doesn’t explain anything except that you guys like writing hundreds of words without answering the question. The basic question is why was my application rejected even after your executives collected all documents, took my company’s stamp on the payslips, and even extended a welcome call- not once but twice.

You have mentioned in the below mail that the reasons are mainly financial and medical and decisions are taken based on certain set of conditions. I believe as an applicant I have a right to know which condition I did not meet. Is it so difficult to clearly tell me what went wrong?

As far as I understand, possible options for the reason could have been:
1. Inadequate health
2. Inadequate earnings
3. Incorrect/incomplete documents

Vis-a-vis the above three possible reasons that come to my mind:

1. You never conducted a medical test
2. I believe I earn well enough to pay your premiums
3. My documents were absolutely correct and complete and it was verified by your executives too.

Now I fail to understand how a company like Metlife can be so unprofessional and callous in attitude towards customers/applicants.

I find your behaviour ridiculous and demeaning; and that is not because you refused my application, but because you refuse to acknowledge the reason and provide a remedy if any.

I hope somebody responsible enough there reads this.

Thank you very much.

Roshan
– Hide quoted text –

On Thu, Mar 10, 2011 at 7:10 PM, MetLife Customer Service wrote:
Dear Kumar,

Greetings from MetLife!

This is with reference to your mail with regards to the above mentioned policy.

We would like to inform that an insurance proposal is evaluated from a number of aspects mainly financial and medical.

Basis the information provided in the proposal form and the supporting document an insurance proposal is analyzed. The proposal is reviewed on prognosis basis which signifies the non suitability of the proposal in a given set of conditions. The decision to not accept the proposal should not be construed as an indication of the health of an individual.

We regret that we would not be in a position to accept your proposal under the captioned application for Met Protect.

Please feel free to mail us for any further assistance.

Thanks and Regards,
Sangeetha S
Customer Service

Please mention the policy number in the subject of the email whenever you write to us for a quicker response. Do not include any
space or any special characters between the digits.

** For the convenience of the policy holder we have upgraded our website, you can access your policy information conveniently and faster with just a click from our home page, http://www.metlife.co.in

You can register Address change, Frequency Change, Fund switch, Premium Redirection and Beneficiary Change online and can register complaint or intimate claim through the portal. Also you can download e-statement.

For assistance on call from 8am-8pm:
1800-425-6969 (Toll Free) OR +91-80-26502244
MetLife India Insurance Company Ltd, Brigade Seshamahal, 5, Vani Vilas Road, Basavanagudi Bangalore-560 004
Fax – 91-80 – 41506969

—–Original Message—–

From: Roshan kumar
Date: Monday, March 07, 2011 03:29 PM
To: indiaservice@metlife.co.in (indiaservice@metlife.co.in)
Subject: Regarding Metprotect online term insurance application

Hi,

This is wrt Application number 495018958 for Metprotect online term insurance plan.

My application has been rejected and the money has been refunded to me via cheque number 568207.

I wish to know the reason for decline, since I had completed all documentary requirements and had even received welcome calls twice from two different executives in your office.

I would appreciate if you could promptly answer this.

Regards,

Roshan Kumar

Reply

Gopal Gidwani March 14, 2011 at 2:47 pm

Hi Roshan,
It is really surprising of metlife to reject the application with an ambiguous reply which is difficult to understand. Well you have two options:
1) Either buy a term plan from some other insurer like iProtect from ICICI Prudential or iTerm from Aegon Religare and forget Metlife and move on
2) Take up the matter against Metlife with their internal grievance redressal officer at gro@metlife.co.in or you can request IRDA to look into your application by dialing toll free number 155255 or writing to IRDA at lifecomplaints@irda.gov.in or alternatively you can also lodge a complaint with the insurance ombudsman based on which city you are based in. Ombudsman offices are located in 12 cities across India.

Reply

Prakash A.M. March 16, 2011 at 12:32 pm

In my view of the matter,all insurance policies have to be bought by not only evaluating the premium costs to the life assured ,but also the insurance company’s reputation when it comes to settlement of claims (payout ratios) and the insurance company’s ability to survive in the long run(solvency ratio). My understanding is that LIC is the best in payout ratios.Unfortuntely,their premiums are high,because of their agency base and commissions theron. I am referring to the article on Term Insurance.Premiums are income for insurance companies,so it is only natural that they and their agents are on their best behaviour and woo you in the best possible manner, at the time of taking out a policy .The true litmus test is settlement of claims.IRDA is a tough regulator,but at the end of the day, good underwriting and low adverse selection can only ensure proper solvency.All this however does not detract from the merits of an otherwise well written article.The articles on retirement annuities and the one on IDBI are also very good (these three are the only ones I have read so far. )Good work,Mr Gidwani.Your erudition and expertise at such a young age shows.Keep it up.All the best.

Reply

Gopal Gidwani March 16, 2011 at 2:45 pm

Hello Mr. Praskash,
Thank you so much for your kind words.

Well with regards to your comments on the claim settlement ratio; yes I agree LIC leads by a big margin. Check the article on claim settlement ratios of insurance companies in 2009-10 at Claim settlement ratio for life insurance companies for 2009-2010. But LIC has been in business and has been around since quite some time. Whereas the private insurers have been around since only 10 years. If you see insurers like ICICI Prudential and HDFC Standard that have been around since some time among the private insurers have a better claim settlement ratio.
Please remember claims received in the first 3 years of selling the policy are treated as early claims and are scrutinised in much detail. And hence the delay in settling the claims. Thats the reason why the claim settlement ratios of companies like Aegon Religare and few other insurers who have started business in the last 3-5 years seem to have a bad claim settlement ratio and appear at the bottom in the table. But that does not mean they are bad companies. I am not defending these companies. At the same time I have nothing against LIC. It is a fantastic company and has stood the test of time. It is only the dynamics of the nature of insurance business that seems to make some companies good and some bad. Here it is not apple to apple comparison. It seems more like comparing apples with oranges.

Still buying insurance at the end of the day is a personal decision. To some the claim settlement ratio and the time taken to settle the claim takes precedence over the premium charged. For some people it is the low premium that takes precedence over the claim settlement ratio and the time taken to settle the claim.

To strike a balance; if a person wants to take 1 crore term insurance cover he can go for a 50 lakhs cover from LIC and the remaining 50 lakhs cover can be divided among two private companies like iProtect from ICICI Pru and iTerm from Aegon Religare. Or if 3 policies seem too much then a person can go for one policy from LIC and one policy from an private insurer.

Reply

Prakash A.M. March 16, 2011 at 6:22 pm

Thanks for the impassioned and quick response. I read it with interest.As you rightly suggested,it would be better to spread one’s risk and avoid putting all your eggs in one basket .With the government receptive to opening up the insurance sector through permitting increased FDI ,this sector is expected to hot up and see some shakeouts and should, some day, see IPOs by, and mergers (the regulator permitting) among the various players, as a result of competition.It would be interesting to see how the game is played out.

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Nitin March 29, 2011 at 11:41 am

Mr. Gopal,

First of all, thanks for the wonderful article.

Btw, I already have 4 different life insurance policies out of which 1 is TERM PLAN FROM SBI.

Now I want to take one more TERM PLAN with the cover of 50 Lacs and tenure of 30 Years.

I have compared the features and premium of different Insurance companies on various sites like policybazaar.com and i-save.com

My main question is what is the main difference between ONLINE TERM PLAN (policy purchased ONLINE on company’s website) and OFFLINE TERM PLAN (policy purchased from Branch/Agent).

What is the drawbacks or advantages of ONLINE policy over the OFFLINE policy?

I can see that for ONLINE policy, premium is less than compared to OFFLINE policy.

SO please suggest me how should I take my new policy? ONLINE OR OFFLINE?

Thanks,
Nitin.

Reply

Gopal Gidwani April 4, 2011 at 8:27 am

Hi Nitin,

The difference between an online policy and offline policy is that in an offline policy an insurance agent is involved and in case of an online policy there is no agent involved and you have to make the premium payment directly to the insurance company online through a credit card or online banking. Because there is no agent involved in an online policy sale the insurance company is not required to pay any commissions to the agent and hence the savings are passed on the customer in the form of lower premiums. So I suggest you go for an online term insurance plan so that you will save a considerable amount on the premium on an annual basis.
You can choose from iTerm – Aegon Religare, iProtect from ICICI Prudential, ePreferred Term Plan from Kotak Life Insurance

Reply

shiv Lal Singh April 4, 2011 at 2:58 am

hi sir
i want an online term plan for 25 years of 50 lakh. please suggest me the best plan for me.
thanks.
shiv
dob-06-09-1974

Reply

Gopal Gidwani April 4, 2011 at 6:09 am

Hello Shiv,

You can break your cover of Rs. 50 Lakhs among two companies. You can choose between iProtect from ICICI Prudential, iTerm from Aegon Religare and ePreferred Plan from Kotak Life Insurance

Reply

Manish May 12, 2011 at 4:14 am

HI Gopal,
Nice article. I noticed you are suggesting to take term plans from 2 companies for higher coverage .I would like to understand incase of claim settlement how does that work, as insurance company need original death certificate , so how its possible to claim from both the companies. Please correct me if I am wrong anywhere.
Thanks
Manish

Reply

Gopal Gidwani May 14, 2011 at 8:20 am

You can get multiple copies of the original death certificate from the Municipal Corporation and submit it to the insurance companies and they will settle the claim. I dont think there should be a problem in settling the claim

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AJAY May 23, 2011 at 6:33 pm

Cheapest online term plan in the market
Hi Gopal
Its a good news for all of us that Aviva comes in the market with aCheapest online term plan it is really cheap & good in all aspects. Complete story is given below

The latest offering, the i-Life plan from Aviva Life Insurance, is priced 16-20% lower than the cheapest online term plan in the market. A 25-year-old man needs to pay Rs 4,051 a year for a cover of Rs 50 lakh for 35 years (see table). This is almost 20% cheaper than the iProtect Plan from ICICI Prudential Life Insurance.

Online term plans have become a huge hit with buyers ever since Aegon Religare Life Insurance launched its iTerm plan in November 2009. In the first year itself, the company sold some 11,000 policies online with an average cover of Rs 65 lakh.

Its runaway success prompted other insurance companies to join the bandwagon. Kotak Life Insurance, which launched its eTerm plan in November 2010, has already sold 1,800 policies online with a combined cover of more than Rs 1,000 crore. Aviva’s i-Life is the sixth online term plan in the market.

With each new launch, the deal has become sweeter for the consumer. Whether it is in the form of longer terms (policies of up to 35 years) or as insurance cover extending to beyond retirement (up to 70 years), customers have benefited from the heightened competition in the term insurance segment.

Some buyers, however, are worried that the terms and conditions of online term plans might have loopholes that will allow companies to reject their claims. They point to the high claim rejection ratio of some private insurers, especially the new players who have set up shop in the past 2-3 years.

But as we explained in detail in our cover story, ‘How reliable is your insurance?’ (9-15 May 2011), new insurance companies usually have a low claim settlement ratio. Gaurav Rajput, associate director, marketing, Aviva Life Insurance, says there is no difference in the terms and conditions of the company’s online and regular term plans (Aviva Life Shield Plus). “As far as products and terms are concerned, they are similar except that one is sold online and the other through regular channels,” he says.

If you are planning to buy an online term plan, keep in mind that the risk cover offered by the company and claim settlement depend on the authenticity of the information you provide.
The cover starts immediately after you make the online payment, but it is subject to your clearing the stringent medical tests that follow.

Also, the information you give about your age, income and existing insurance cover, as well as the health declaration, will be scrutinised very closely. Make sure there is no inconsistency. Don’t hide any medical problem or deny that you use tobacco. Sure, this will increase the premium, but at least your claim will not be rejected later.

Online plans are cheaper because the marketing costs of the company and the perceived risk of death are significantly lower.

There is no intermediary between the buyer and seller, thus saving on commission. Also, as Rajput points out, the Internet user is perceived to be reasonably wellto-do with better access to healthcare, and, therefore, carries a lower risk than the average Indian.

If term plans can be sold online, why not other policies such as Ulips and pension products? Yet, not many such plans are on offer. Besides, the discount is not as steep as in the online term policies. Insurers say this is because a term plan is not a complex product.

“One only needs to compare the price of a term plan, whereas Ulips and endowment plans have other features that need to be explained to the buyer,” says Rajput. Even so, companies should give buyers the option to pick policies online and save on the commission that the agents pocket.

Reply

Dilip June 3, 2011 at 10:27 am

Hello Gopal,

Wonderful information regarding Term Plan and great reply from people. Its not just reply I can call it as discussion board. Good to see this.
Even I am planning to go for Term Insurance. I am 30 years of age and planning for 50L for 30 years.
Kindly suggest me which one or two to go for. As per Ajay’s information Aviva seems interesting (Coz Cheaper :)). Which companies claim process is good and easy? Can we have two nominees for one Term Insurance?

Awaiting your kind suggestion.

Dilip Kumar
dilipkumarsr@gmail.com

Reply

Gopal Gidwani June 4, 2011 at 7:11 pm

Hello Mr. Dilip,

Thanks for the kind words on the article.

Regarding your query, you can split your cover among iProtect from ICICI Prudential (claim settlement ratio of 91 for year 2009-10) and i-Life from Aviva (currently the cheapest plan in the market). And you can have 2 nominees for one plan

Reply

Dilip June 7, 2011 at 3:32 pm

Thanks for your reply Gopal,

I am bit concerned about ICICI as one of my friend said ICICI claim process is not that great and people have to run around their offices for the claim (I am not sure why companies do this). Could you please explain the claim process for Term Insurance companies and which is simpler and best.

With regards to Aviva, again some issues raised as this is new to term insurance and we can not trust and all. I really don’t know how to go about it.

Kindly advice.

Regards,
Dilip
dilipkumarsr@gmail.com

Reply

Gopal Gidwani June 7, 2011 at 4:14 pm

Hello Mr. Dilip,

ICICI Pru ranks 3rd in the list of best claim settlement ratios for FY 2009-10. The first is LIC (96%), second being HDFC Standard Life (91%) and third best is ICICI Pru (90%), out of the 23 odd life insurance companies currently operating in India. But LIC and HDFC at the moment dont have online term insurance plans. The premiums of their other term insurance plans which can be bought from agents are way too high compared to premiums of online term plans. (Claim Settlement Ratio in simple words is number of claims settled by the insurance company for every 100 claim applications received by the company in a financial year)

Regarding your query on the procedure of claim settlement. Well its pretty much the same with all life insurance companies. You have to intimate the company about the death of the person and then submit the policy bond, the death certificate, claim form and any other documents that may be required to settle the claim as requested by the insurance company. If its a normal claim (policy is in force since more than 3 years), then such claims are normally settled in 14 days if there are no issues pending. For early claims (where policy is less than 3 years old) the insurance companies go for detailed investigation and claim settlement takes a little longer.

In case you are not comfortable with Aviva also, then you can go for an online plan of IndiaFirst Life Insurance (Anytime Plan). It is promoted by PSUs – Bank of Baroda and Andhra Bank and Legal & General of UK as the foreign partner. Their premium is very competitive as compared to other online term plans available in the market. Its a relatively new company as compared to other insurers in the market, but it holds promise.

Also I would advice you to split your insurance cover among 2 companies – 1 private and 1 PSU. Also in the application form fill all the required details honestly and dont hide anything to ensure smooth and quick claim settlement later.

I hope I have answered your query. In case of any other doubt do write back to me.

Reply

Sandeep Mehta June 6, 2011 at 3:36 am

I took Met Protect Term Plan from Metlife Insurance on 8th May 2011. My DOB is 9th May. I paid the premium online. I did mention in the form that before 1 year I was admitted to the Hospital due to Stomach Pain and underwent Colonoscopy. I was discharged in 1 day. I also mentioned this to the Doctor where I went for Medical Test as suggested by Metlife.

Metlife asked me for the Medical Reports. I said that I don’t have the copies as I have submitted the originals to the Mediclaim Insurance Co. I didn’t keep the photocopies. I was told to submit the same in declaration after 1 week. I submitted the same on same day on plain paper in format which they suggested me.

Now before 3 days they asked for the documents again through email since I was in Thailand. They did contact me on phone but I couldn’t pick up the phone. But I replied immediately that I don’t have the documents by email. Till that time I sent my complain to the Grievance Redressal of Metlife. They told me that problem is only with the submission of Medical Reports which I said that I can get to the Mediclaim Insurance Co and submit the same.

Today I got reply by email from Grievance Redressal that my application is rejected but not on Health grounds.

My queries are

1. What next? Will I get official reply from Metlife citing reason for the rejection?
2. What can I do next after I receive the official letter?
3. Can I apply with any other Insurance co. since this time it is rejected? Can they reject the same since Metlife has rejected?
4. I was admitted only for 1 day that too before 1 year in Hospital. Do I need to disclose this?

Please suggest.

Reply

Gopal Gidwani June 6, 2011 at 5:08 pm

Hello Mr. Sandeep,

Thanks for sharing your experience with MetLife. Your is the second case I am hearing about bad experience with Metlife after Mr. Roshan Kumar. If you check the comments above Mr. Roshan Kumar’s application was also rejected by Metlife. You have also mentioned that your application has been rejected by MetLife and that too not on Medical Grounds. Well that really sounds very surprising and it only Metlife people who can really tell us the reason for rejecting applications. Now regarding your queries. Let me try and answer them one by one:
1) You will get an official reply from Metlife mentioning the reason for the rejection. The reason will be clearly stated or like Mr. Roshan mentioned the reply may be little ambiguous and difficult to understand. It depends on the reply you get and will be able to comment on it only after reading it.
2) Well there is nothing much you can do with the letter. If you want you can raise the matter with IRDA about MetLife rejecting your application. Rather than spending your precious time on doing that, I suggest you move on and apply with some other insurance company.
3) Nothing stops you from applying with any other insurance company. The selection process of each company is independent and the decision of MetLife to reject your application will play very little role or no role in the assessment of your application by any other company.
4) Please disclose everything possible in your application form and be transparent. Even if you were admitted for 1 day, please make a mention of it.

Best Regards
Gopal Gidwani

Reply

MAULIN SHAH June 16, 2011 at 5:07 am

Dear Gopal,

I would like to know about Is Aviva’s term paln is good? Aviva Lifesheild Platinum plan

Reply

Gopal Gidwani June 17, 2011 at 4:10 am

Hello Maulin,
Aviva has recently launched the cheapest term insurance plan in the industry. The term plan name is I-Life. This is much cheaper even than Lifeshield Platinum Plan. But I have doubts over the quality of their customer service. Few days back there were some technical problems with their website. I was trying to calculate the premium for myself for I-Life Plan with Mozilla Browser and Google Chrome Browser and the website was getting stuck. Then it worked fine in Internet Explorer. I raised this issue with their customer care, but no one bother to reply.
Also the claim settlement ratio of Aviva is 87.11. ICICI Prudential which is offering I-Protect Term Plan has a much better claim settlement ratio at 90.17 as compared to Aviva.

Reply

MAULIN SHAH June 20, 2011 at 5:23 am

Hello Gopal,
I want to buy online policy of MetProtect term plan is it good? and also want to buy another term plan of other company so please suggest me good plan. my age is 26 and want to take term of as long as possible.

Reply

Gopal Gidwani June 20, 2011 at 6:09 pm

Hello Maulin,
If you go through the comments posted by the readers of this article, you will find that metlife has rejected the application of two persons. The reply given for the rejection is very ambiguous and I could not understand it clearly.

I will suggest you to choose between iProtect from ICICI Prudential (good claim settlement ratio of 91%) or ‘Anytime Plan’ from IndiaFirst Life Insurance. You can read about the latest term plan comparison article at http://www.bachatkhata.com/2011/06/online-term-insurance-plans.html

Both iProtect and AnyTime Plan come with a maximum tenure of 30 Years

Reply

kumar July 3, 2011 at 12:56 am

hi, pls suggest me increasing term policy with return of premium, wavier of premium and terrorism cover for 35- 40 lakhs for 30 or 35 years.

Reply

Gopal Gidwani July 5, 2011 at 6:09 pm

Hi Kumar,
I would advise you to go for a pure term plan and not a return of premium plan. Return of premium plan will be far more costly than a pure term plan. The amount that you will save by buying a pure term plan and not a return of premium plan can be invested in mutual funds. The returns generated from this will be much more than the premium that you will get at the maturity of the plan.

You can choose from Anytime Plan (IndiaFirst Life Insurance Plan), iProtect Plan (ICICI Prudential Life Insurance), iTerm (Aegon Religare Life Insurance). Most plans cover terrorism unless it is explicitly mentioned in the exlcusion section of the insurance plan.

Reply

Dan July 12, 2011 at 5:14 am

Hi,
I am 33 yr old male, NRI, diabetic & have Cholesterol. Will i be eligible for term insurance? (for 1 Cr). what are the usual medical reasons for rekjecting applications?
Thanks,
Dan

Reply

Gopal Gidwani July 13, 2011 at 10:41 am

Hello Dan,
Your case seems much more complicated than other normal cases. In such cases the procedure of each and every company is different from each other.
a) Some company may offer you insurance at a much higher premium than normal customers,
b) some company may cover death due to diabetes and cholesterol related problems say after a waiting period of 2 or 3 or 5 years (it depends),
c) some company may include these diseases in list of permanent exclusions and offer you term insurance,
d) some company may all together deny you term insurance due to the illness you are suffering from.

So it is entirely company specific and you will have to approach them and see what they say. You can begin with approaching ICICI Prudential. Whichever company you approach just make sure you make all proper disclosures and please don’t hide anything else there will be problems at the time of settlement of claim.

Reply

Dan July 14, 2011 at 4:01 am

Thanks Gopal for your prompt and apt response. But will agents be able to tell us prior to the process if their company will be able to provide term Insurance in such cases or is it only after going through the medicals and then later the underwriter decides about the case?

Reply

Gopal Gidwani July 17, 2011 at 5:11 pm

Hello Dan,
In case you are going for an online term insurance plan, then there are no agents involved in between. Even if you are going through an agent for a normal term plan (not an online one) still I feel some agents will not be in a position to tell you whether the company will cover you or not and if the company will cover you then the agents will not be in a position to tell you how the underwriter’s will handle your case. I mean agents won’t be able to tell you how much loading will be done by the underwriters.

So I guess you will have to first submit your application with the normal premium and then the company through their underwriters (after evaluating the medical report) will come back to you on whether your case will be accepted or not and if accepted then on what terms.

Reply

Dan July 18, 2011 at 4:12 am

Hey Gopal,
How can they determine if I have any medical condition , i mean if I do not disclose my diabetics and cholesterol and if i manage through their medicals, then how can they claim that i have had these in case of future claims? I have read in one article that an insurance company rejected a claim saying that the insured was diabetic. Howeverm, and they could not prove it at the time of their pre medical and so the insurance ombudsman ruled in favour of the insured.
Just trying to understand different scenarios, it does not mean that I really want to hide these things during my policy proposal/ application..

Reply

Gopal Gidwani July 18, 2011 at 12:15 pm

Hi Dan,
Insurance companies require the prospect to undergo a medical test before arriving at a decision on whether a person can be covered or not and if he can be covered then at what premium. But in a medical test it is not possible for the insurance company / medical practitioners to check each and every part of your body to see if its functioning normally from insurance coverage point of view. So the onus lies on you to declare everything in good faith at the time of applying for the policy.

The example that you gave was ruled by the ombudsman in favour of the insured as the insurance company could not prove it. The onus always lies on the insurance company to prove on what grounds they have rejected the claim. This must be one off case when the insured got away with it. But trust me insurance companies have technically very sound people who can prove things if they feel they have rejected a claim on genuine grounds. Remember no company will reject the claim just for the sake of it untill they have strong belief that there was something wrong with the case.

Also in your case if you knowingly don’t disclose your diabetes and cholesterol condition the insurance company through their technical people can easily find out at the time of issuing the policy or at the time it becomes a claim. If someone knowingly doesn’t declare something then it becomes a case of fraud and the contract becomes null and void. In such cases even the ombudsman nor the IRDA will be able to help you. I am not saying that you are planning to commit a fraud. So don’t get me wrong. I am just trying to making you aware of the consequences the family may face at the time of claim. So I will advice be very transparent right from day 1 and disclose everything irrespective of whether the insurance company asks you for it or not. It might happen that some company may not cover you. But you need not get disheartened by it. You can keep trying. You will be required to pay a little higher premium than others, but the little higher cost is worth it. It will make sure the family does not face any hassles at the time of claim settlement.

Reply

Dan September 4, 2011 at 7:15 am

Dear Gopal,

I am planing for a term insurance from Metlife in Kuwait. I would like to clarify some things before I take the policy:
1) if I take insuranec with metlife in Kuwait can the insurance be calimed from India.
2) will this be under the preview of Insurance Ombudsman in India.
3) it is very likely that in the event of my death, my familiy will be in India and they will have to process the claim from india.
4) it would be foolish to take a term insurance when my dependants cannot claim the money as they are not in Kuwait.

Regards,
Dan

Siddharth August 4, 2011 at 6:00 pm

Hi,
I purchased 50L policy from aviva fr 35 yrs. gave all the true info.
My policy was declined coz of following 2 reasons:
1) i had a fight few yrs back in collage, the case is still pending in court
2) i had n accident 4-5 yrs bck in which i had a head injury, but now i am absolutly fit n fine workin in a sw com for over 5 yrs. been abroad as well muliple times.

Whether the reason to decline the policy are genuine?
Qsn#1: If some body has a court case pending , then whether he is not liable for a insurance policy???
Qsn#2: I declared that I had n accident, even though they declined giving the same reason although I am totally fit. The did the medical examination but wont have found any thin in that. It was me who declared issn’t. If I wont have declared the 2 facts, how could the insurance company would have concluded regarding the same.

I think I should have lied, then it would have been OK from their side.

What should I do now? I need a term plan….
plz suggest..

Reply

Gopal Gidwani August 7, 2011 at 11:37 am

Hello Siddharth,
Well if there is a court case pending, I see no reason why you should not get life insurance. I guess since the verdict is not out, the company may have decided not to go ahead with it for the time being. Regarding the accident, as you have said that you are perfectly fit, you should have insisted that the company take your medical test and then decide your case rather than jumping to a conclusion even before the medical test.

Well Siddharth even if Aviva has rejected your case, nothing stops you from applying for life insurance with other companies. But then as you have mentioned, hiding anything will not at all be a good idea. I will still suggest be transparent with all information as insurance companies do have technically very sound people than we think and they can find out information if required.

Reply

rajesh August 11, 2011 at 9:46 am

Hi Gopal,

Your doing a great service by educating people on personal finance. Great work!!

I am earning currently 7L per annum from an IT company. So i thought of taking a term insurance for 70L for 30 years. I have finalized on 2 companies for splitting this insurance based on the above discussions. those are i protect option II with accidental death benefit and anytime plan. Both through online.

I am planning to take insurance for 40L from i protect and 30L from anytime. The reasoning behind this is, anytime is promoted by PSU’s and we can have good trust on it, and in case of claim rejection by another insurance company we can show that anytime has accepted the claim. But since the premium is slightly higher for anytime iam going for 30L and chosing 40L for iprotect due to less premium.

Is the insurance cover enough for my earning?
Do you think that i should take atleast one termplan through an agent? Since the agent takes care of all the requirements during a claim.
Do you suggest any other division between these 2 companies?

Best regards,
Rajesh.

Reply

Gopal Gidwani August 13, 2011 at 9:43 am

Hello Rajesh,
Well from your comment I can see that you have gone through the above article and all the following comments on this thread thoroughly. And accordingly you have come up with your own strategy on how to go about life insurance. It is indeed very heartening to see that people read and then start applying things. Keep up the good work. Such comments from readers like you motivate us bloggers to keep coming up with more articles.

Now coming to your query. I dont know your age and your liabilities and financial responsibilities. So I will not be able to comment if the insurance amount of 70 lacs will be enough. Ideally your insurance cover should be the present value of all your future earnings till your retirement. This should also take into account 5% or 10% increase in salary every year. Also the insurance amount should take into account the value of your liabilities (home loan, vehicle loan or any other loan/s) and the value of your responsibilities (amount for children’s education, marriage, retirement expenses of spouse etc). Taking all these things into account you should arrive at your life insurance amount. This ensures that if a person is not there then the person’s family does not suffer loss on account of the person’s future earnings, liabilities can be taken care of and financial responsibilities can be taken care of even in absence of the earning person.

Also you can go for both online plans. Claims settlement can be done through the insurance company office even though the plan has been taken online.

Also your decision of splitting the insurance cover among iProtect and Anytime sounds good and you can go ahead with it.

Reply

rajesh August 18, 2011 at 9:46 am

Hi Gopal,

Thank you very much for your kind reply.
Currently i am 27 years old and got recently married. I have a personal loan of 2L for 3 years. which i have been paying EMI for last 2 years. Apart from that i dont have any other loans.

I have gone through your article “sample financial plan”, In that you have advised to take atleast 1 crore each while the calcualtion is around 6.80 crore. I dint understand how did you arrive at 1 crore each.

Since i am a newly married do i need to take into account of amount for children’s education, marriage etc and calculate my insurance required, Or to apply for new insurance plan in future for these?

Also i have taken an endowment assurance policy for 38K per year, and have paid premiums for 4 years till now. I am planning to discontinue that and make it a paid up. In one of your articles you have advised to continue the current policy till you get new policy. I am planning to take two term policies as said in my previous post. Do i need to pay this years premium which is in due and apply for them?
Do i need to inform that i have this endowment policy for the new insurance companies?

I also have a money back policy and an ULIP which iam planning to continue. Do i still need to show the endowment policy to the new insurance companies or show only these two policies?
Please advice.

Thanks,
Rajesh.

Reply

Gopal Gidwani August 20, 2011 at 11:37 am

Hi Rajesh,
The amount of 6.80 crores is the future value of the couples’ earning for the next 31 years. If you discount this amount at a risk free rate of 8% (PPF rate) take the present value of this amount, it comes to 62,57,091. So roughly 62.57 lakhs. To this you should add the value of their liabilities (Home loans and other loans if any) and value of their financial responsibilities (cost of children’s education and marriage etc). Adding all these 3 amounts (present value of future income, financial liabilities and financial responsibilities) I arrived at the amount of 1 crore.

Since you are newly married and dont have kids, you need not consider the amount of Children’s education and marriage in your insurance calculation at the moment. You can always increase your insurance cover in future. But there is no hard and fast rule for this. Some people consider this amount even if they don’t have children. So see how you are comfortable and accordingly decide.

Ideally I will advise you pay this year’s premium for the existing policy and at the same time apply for the new policies. Once you have the new policies in place, you can make the existing policy paid up. The whole idea is to make sure you have insurance cover even during the transition period.

Also even if you plan to surrender the existing policies (Endowment, ULIP, Money-Back), still declare it in the new policy application. Be transparent all the times.

Reply

Guru August 22, 2011 at 11:10 am

Dear Gopal,
Thanks for a very good elaborate article.
I need some clarification. Are thse online term plans are available to NRIs also or restricted to residents only? What happens if someone is resident of India at the time of taking the policy, but subsequently becomes NRI? Does he have to declare the change in status?

Regards
Guru

Reply

Gopal Gidwani August 23, 2011 at 7:16 pm

Hello Mr. Guru,
I am not sure of your first question about online plans being applicable to NRIs. I did check the websites of ICICI Prudential and Kotak and did not come across online plans being offered to NRI. Though these companies have other products which are being offered to NRIs. But I did read on the LIC website that when the NRI is in India during his trip to India and he applies for insurance, he is given the same treatment as a resident Indian. But sadly enough LIC does not a have an online term insurance plan, which lot of people are waiting for, including me ……….. 🙂

I guess the biggest hitch in offering online term plans to NRI’s is the medical check-up part. The underwriting process for online term plans is more stringent than other plans due to their nature of high cover at very low prices. Most online term plans will require you to undergo a medical test. And if you are not in India then where will you give the medical test? This I guess is one of the problems. So you can check with individual companies and apply for insurance when you are in India.

Regarding your second question, yes you will have to declare your change in status to the insurance company from resident Indian to NRI.

Reply

sandeep August 24, 2011 at 2:56 pm

Hi Gopal,
when i ever i go through these plans there is a term called Accident or “accident raider” which is pretty confusing.

please let me know what is understand is right or wrong

does the policy go void is case of accidental death or is it some thing like the insurance company is not liable to pay any compensation incase of accident

the other thing is some thing like in case of survival of an accident the insurance company is not liable to pay in partial if not opted

if both the cases that i have mentioned is wron can you please explain the process of accident raider plan in a term insurance.

thanks,
Sandeep

Reply

Gopal Gidwani August 25, 2011 at 5:29 pm

Hello Sandeep,

Accident Death Benefit Rider provides additional monetary benefit in case of death due to an accident. If a person dies in an accident and has not taken Accident Death Benefit Rider then he will get the normal sum assured (plus accumulated bonuses if any) as contracted at the time of taking the policy. If a person dies in an accident and has taken Accident Death Benefit Rider then he will get the normal sum assured (plus accumulated bonuses if any) plus the amount specified under this rider as contracted at the time of taking the policy.

And as you have mentioned if a policy goes void due to accidental death? Please note there is nothing of that sort. If a person dies due to an accident the company is liable to pay and it will pay the sum assured .

Reply

Amit August 31, 2011 at 2:06 pm

Dear Gidwaniji

I am planning to buy a term insurance please guide me in reference to following details

1. My age 29 yrs, my wife 27 yrs
2. I do have LIC endowement policy of Rs 5,00,000 paying premium @Rs 1731 per month since june 2005 & LIC health policy paying premium @ Rs 10,000 Per annum. My wife doesnt have any insurance.

I am planning to surrender both above policies & buy term insurance from 2 different companies with following requirements

1. We both are planning to have single term insurance policy whether such policy is available in market? if yes then will it be a good decision to go for it? How tax benefits can be shared in case of above policy?
2. Policy should have option to increase sum asured over a policy term
3. is it good option to opt riders available on term policy?
4. is opting for single premium is better than paying premiums annually?

Regards

Reply

Amit August 31, 2011 at 2:12 pm

Dear Gidwaniji,

I forgot to mention that we both are planning to go for insurance of Rs 25,00,000 each which should go increasing over a period.

sir there may not be such product to suit my requirement exactly but please suggest best possible.

Regards

Reply

Gopal Gidwani August 31, 2011 at 7:28 pm

Hello Amit,
LIC is offering a joint life insurance plan by the name of “Jeevan Saathi” for married couples. But this is an endowment plan and not a term plan. You can go for separate term plans for yourself and your spouse.

Regarding riders you can opt for ‘Accident Death Benefit’ Rider. Since you have a separate health policy you need not avail the critical illness rider.

Regarding the premium go for annual or half-yearly premium.

Regarding increasing cover e-preferred term plan from Kotak Life Insurance offers you the option to increase cover by 50% during event of Marriage and Purchase of House (subject to maximum of loan amount). It allows you to increase cover by 25% during event of child birth and on the 1st, 3rd and 5th policy anniversary.

Reply

Rahul Marathe November 8, 2011 at 4:04 pm

Hi,
This is really good information, but I am still confused which term policy I should go for. I am 38 year old. I am already having other LIC policy like Jeevan Mitra (Triple Cover Endowment Plan) and Jeevan Anand. Also have unit linked HDFC pension plan. LIC policy are doing good looking at the bonus option. But I feel I am paying very high premium for HDFC pension plan of Rs 25000 per annum. I alredy completed 3 year for HDFC. My question is…

1. I am not sure if my comparison of HDFC pension plan with online term policy is correct.

2. Should I surrendor HDFC policy and opt for online term policy.

3. If yes to question 2, which policy is good?

4. Should I wait more and see how HDFC do?

Reply

Gopal Gidwani November 19, 2011 at 1:17 pm

Hello Rahul,
Term plan and Pension plans cannot be compared as the purpose of both of them is very different.

In case you are just looking for pure protection cover then you should go for a term plan, but if you are looking for regular income post retirement then you should go for a pension plan. So depending on your objective you need to decide whether you should keep the pension plan or go for a new term plan

Reply

siva subramanian September 13, 2011 at 3:12 am

Dear Gopal,

First of all I congratulate u for spending your valuable time in providing correct guidance to many of us. I want to compare kotak assured income plan with other money back plans. Secondly, I have paid premium for four years in kotak flexi-protect plan II and it is in auto cover mode. I have not paid the premium further as adviced by my friend who said it is better to go the assured income as the cost and returns are very bad in flexi-protect. I know that comparing a money back with ulip is wrong but my current f.v(48,000), is very low compared to the money paid(60,000) for four years. Pls advice
thanks, siva

Reply

JAGDEEP September 23, 2011 at 6:58 pm

hi this is jagdeep wagh from thane city (maharashtra) .according to service,claim ratio,claim settelment,etc.. i m looking 4 best term plan 4 me (max.50 lac).. i m 31 yrs old i hv a 1yr son . my wife is 23 yrs old.few days ago nimbus wealth mangement called me & shown different companies term plans..i.e. aviva shield-iccici i protect-kotak prefferd-lic etc..i lik kotak prefferd pure term plan prem.-around ( Rs.6500) 4 30 yrs term.i m so confused abt tht is it ok 4 me or not? online policy and offline policy there is vast difference btwn them. plz plz plzzz suggest me smthing .. which policy should i take ? online ooffline & through insurance india.com or policy bazar or etc.& there premimum is different.. how? which 1 is best 4 me

i want evry coverd 4m tht policy lik terroist atteck or natural calamities etc .. shall i take kotak prefferd term plan 30 lac -30 yres term & or any other company 30 lac term for 30 yrs term.. i hope u wil understant wat i want to say ? …..

plzzzzz plzzzzzzzz sir suggest me .. m very worryinggg abt tht…..

regards
JAGDEEP ( 09819496501)

Reply

Gopal Gidwani December 2, 2011 at 7:28 pm

Hello Jagdeep,
You can go for ePreferred Term Plan from Kotak. It is a good plan. Other plans that you can consider include ‘Click2Protect’ from HDFC Life or ‘i-Life’ from Aviva Life Insurance. Go for online term plan and buy it directly from the company.

Reply

Manoj November 9, 2011 at 5:12 am

Hello Gopal Ji,
I am having a LIC endownment plan of Rs 5 Lacs with 25 000 premium annually and also one traditionla plan of AVIVA Dhan vridhi with 15000 premium half yearly.I am looking for a term plan of Rs 25 Lacs . Please advice me will it sufficient for me and from which company should I get term plan. I have analysed 4 companies in which India First Life premium is very low in comparion to other companies plan like AVIVA I-life, ICIC I-Care and Kotak e -prefffered.

Thanks in advance
Manoj

Reply

Gopal Gidwani November 19, 2011 at 1:12 pm

Hello Mr. Manoj,
You can go for ‘AnyTime Plan’ of IndiaFirst Life Insurance. Very soon LIC is also going to come out with an online term insurance plan. The date is not declared.

To know whether Rs 25 Lakhs is enough or not,
1) evaluate the value of your financial liabilities like home loan and other loans and
2) evaluate the value of your financial responsibilities like child education, child marriage, retirement etc
From the above two subtract the value of your assets and you can get the insurance cover amount

Reply

rachna gupta December 17, 2011 at 7:10 pm

gopal ji,

i am thinking of a term plan for 50,00,000 for my husband. but am getting confused between kotak and lic. also my husband has quit smoking from last 5 years. before that he was a light smoker ie. 2-3 cigarets in a day. so does he come under smoker or non smoker category. lic has no nonsmoker policy but kotak has and there is a huge difference in the premium of non smoker and smoker policy. what should be disclosed during the medical. and which company should we go for… lic or kotak.

Reply

Gopal Gidwani December 21, 2011 at 8:01 am

Hello Rachna,

I will suggest you go for LIC Jeevan Amulya for 10 Lakhs and the remaining 40 Lakhs with Kotak e-Preferred Plan. The reason being, if at the time of claim one company honours the claim and the other does not, then you can ask the other company also to pay considering the first company has paid the claim.

With regards to disclosing about smoking, you disclose it in the proposal form that your husband has quit smoking 5 years back. Most probably he will be classified as a non-smoker. Dont hide anything. Disclose everything whatever you know that may influence the premium pricing.

Reply

Ravi Shankar January 24, 2012 at 7:59 am

Hi Gopal,

My DOB is 31-Jan-1978. My wife is a House Wife and we have one Boy kid of 3.5year.

I wanted to your guidance to buy a Term Plan of 50L for a period of 30 years. Please sugegst the best suitable product.

Regards,
Ravi

Reply

Gopal Gidwani January 28, 2012 at 8:49 am

Hello Ravi,

I will suggest you to go for click2protect from HDFC Life. Their premium rates are very competitive and besides they have the second best claim settlement ratio after LIC for 2010-11

Reply

Gopal Gidwani February 8, 2012 at 6:03 am

Hi Friends,

Now we have an article on the comparison of claim settlement ratio of life insurance companies for 2009-10 and 2010-11. You can read about it at

http://www.bachatkhata.com/2012/02/claim-settlement-ratio-for-life-insurance-companies-for-2010-11.html

The article also has a comparison of the features of various term plans being offered by life insurance companies and the premiums being charged for these term plans.

Best Regards
Gopal Gidwani

Reply

Vikram March 16, 2012 at 8:46 am

Hi Gopal,
I have LIC term plan (Jeevan Amulya) for 25 Lac for which I pay premium of Rs. 11,125/- which seems to be very costly. I am 38 yr and planning for another 50 Lac term plan urgently.
Seek your suggestion as to
1. shall I surrender LIC term plan and chose 2 new cheaper online plan for 75 Lac in the ration of 40:60 ?
2. Or should I continue with LIC for 25 Lac and go for another 50 Lac?
In any case please suggest the best option for me and please suggest the best 2 term plan companies also in terms of premium and claim settlement track record.

Redgs

Vikram

Reply

Gopal Gidwani March 16, 2012 at 9:39 am

Hello Mr. Vikram,

You can split your term insurance requirement into 2 term plans. I will suggest for the time being you hold on to LIC Jeevan Amulya. Along with that go for a second term plan from HDFC Life (Click2Protect Online Term Plan). LIC has made an announcement that by the end of March they plan to come out with an online term plan. Maybe at that time you can replace Jeevan Amulya with LIC online term plan depending on the terms and conditions of the LIC online term plan

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Vishwesh September 20, 2012 at 6:15 am

Gopal Gidwani,
http://www.bachatkhata.com/2012/02/claim-settlement-ratio-for-life-insurance-companies-for-2010-11.html.
As suggested by you I went for Click 2 protect policy of HDFC Life — They calculated a premium of Rs. 11010/- for a 25 yr policy of 50 lkhs (my age -39 yrs).The proposal is under process. I had to go for “urine nicotine” test . Now they have hiked the premium to Rs.14750/- plus service tax to Rs. 1823/- giving reson that test results indicate “Tobacco Consumption” . The result is “absolutely false”. I have never been a tobacco consumer. They have given me the option to decline the policy. But it is very humilating. How do I challenge the test results. Can I demand another test or their test report? I have spent almost 4weeks communicating, scanning the requiste documents and sending . Please advice at the earliest.
Regards,
Vishwesh.

Reply

Gopal Gidwani September 21, 2012 at 11:38 am

Hello Vishwesh,
As you have suggested you can ask them for a copy of the report. You can get the test done on your own and compare it with the HDFC Life report and take a second opinion. If there is a difference between the HDFC Life report and the 2nd report you can take up the matter with HDFC Life accordingly.

Reply

Vishwesh September 24, 2012 at 12:45 pm

Gidwaniji,
As adviced by you I emailed HDFClife to send a scanned copy of the test result(urine nicotine). But they avoided saying that I could download it only when my policy comes into force (which is not possible until I accept the hiked up premium). I was about to go for a test at a very reputed lab in Mumbai which most pathological labs/doctors refer. This could have helped me to cross check the results and challange it for dicrepancy. It is very disgusting to to know a standard company like HDFClife is rsorting to such bussiness practice. I see that I have very little option but to decline the proposal.
I hope my experience will caution people going for ‘Click to protect’ plan from HDFClife.
Regards,
Vishwesh.

Reply

Gopal Gidwani October 3, 2012 at 4:06 pm

Hello Vishwesh,

You may take up the matter with IRDA through the IGMS system or by contacting the IRDA Grievance Call Centre (IGCC) on ‘155255’ (toll free number) or sending e-mail at complaints@irda.gov.in. You can read about these procedures at the following link

http://www.bachatkhata.com/2012/04/grievance-rederessal-procedure-in-life-insurance.html

Reply

digvijay January 8, 2013 at 6:37 am

hello Gopoal ji,
sir, i am 33 year old, want 1cr term plan for 30-35 years, kindiy suggest me , its better to take two plan each 50 lacs! which one suit for me……..

Reply

Gopal Gidwani January 12, 2013 at 7:39 pm

Hello Digvijay,
You may consider Click2Protect from HDFC Life. You may split the insurance cover among 2 companies. Apart from HDFC Life you may consider ePreferred from Kotak Life or Protector Plus from Kotak Life

Reply

DEEP May 21, 2013 at 9:46 am

Dear Mr.Gidwani,

I am 40+, married, have 2 daughters.
I have 4 endowment policy from metlife and LIC ( not more than 15 lakhs on death) I have 2 term insurance from LIC worth rs.16 lakhs.
I look forward for your recommendation for further term insurance. I am diabetic and smoker. I think more 70-80 lakh would be good. I somehow tend to believe that private companies create trouble in settlement than LIC. I look forward for your views.

Reply

Gopal Gidwani June 16, 2013 at 10:12 am

Hello Mr. Deepshankar,

First of all there is no reason to believe that private insurance companies create trouble in settlement than LIC. If any claim is rejected, the insurance company has to give a valid justification for the same. If a person believes the insurance company’s decision to reject the claim is not correct, there are various grievance redressal channels that he/she can approach against the insurance company. More details on this can be found at http://www.bachatkhata.com/2012/04/grievance-rederessal-procedure-in-life-insurance.html

Now coming to your insurance requirement, you may consider the following plans: Click2Protect from HDFC Life, eShield from SBI Life, ePreferred Term from Kotak Life or Protector Plus from Birla SunLife. All these plans have good features with competitive premiums and the companies have a good claim settlement ratio. The details of these plans can be found at
http://www.bachatkhata.com/2013/01/claim-settlement-ratio-for-life-insurance-companies-for-2011-12.html

You have mentioned that you are a diabetic and smoker, and hence your premium will be on the higher side as compared to other people of the same age category who are non-smoker and non-diabetic.

Once you buy a term plan, you may consider stopping some of the endowment policies and redirecting the money towards balanced mutual funds. The returns generated by endowment policies are low as compared to the potential returns that can be generated from balanced mutual funds over the long term. More details about investing in mutual funds can be found at
http://www.bachatkhata.com/2012/03/investing-in-mutual-funds.html

Reply

Prabhat September 5, 2013 at 11:56 am

Dear Sir,

Thanks for educating the people on personal finance. Great work!!

I am 36 yr and planning for 1 crore term plan in this month.

My Income is between 5-7 lakhs per annum.

After searching on net for this, I got the below Term Plan details,

Sum Insured : Rs. 1Crore- DOB : 05-01-1977 Policy Term : 35 Years Gender : Male Tobacco User : No

Aegon Religare – iTerm (Medical)-Premium Rs. 12135/-Sum assured 1 Crore-Term 35 yrs.

AND

Tata AIA-i Raksha Supreme-Premium Rs. 13034/-Sum assured 1 Crore-Term-35 yrs.

Here I found some good facilities available with Religare (riders) but not with Tata,

So seek your suggestion as to go for 100% with Religare OR 50:50 for both,

OR

Should I go 1st one with LIC for a less amt. and 2nd one with private company (10:90) as you have suggested in some cases here.

Please help me to take decision in this regard.

Regards,

Prabhat

Reply

Gopal Gidwani September 24, 2013 at 4:11 pm

Hello Prabhat,

You may consider splitting your life insurance requirement among two companies. You may split it between LIC (Amulya Jeevan) and Aegon Religare (iTerm). Also the riders offered by Aegon Religare under iTerm plan are good. You may go for this plan. Make sure you disclose all required information while filing the proposal form.

Reply

Amit Aggarwal March 28, 2016 at 5:11 pm

gopal sir
i want to take the team plan for 2 crores. my age is right now 30 years. I was looking at HDFC click to protect plus and ICICI I protect smart. for which should i go for. Should i take both of 1crore each. please guide me asap.

Reply

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