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.
|Metlife Insurance – MetProtect||Rs 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 Plan||Metlife Insurance – MetProtect||Kotak –
e-Preferred Term Plan
|Aegon Religare – iTerm Plan||ICICI Prudential – iProtect Plan|
|Minimum age at entry||18 Years||18 Years||18 Years||20 Years|
|Maximum age at entry||60 Years||65 Years||60 Years||65 Years|
|Maximum Maturity Age||70 Years||70 Years||65 Years||75 Years|
|Minimum Sum Assured||Rs 25 Lakhs||Rs 25 Lakhs||10 Lakhs||10 Lakhs|
|Maximum Sum Assured||No Limit. Subject to Underwriting||No Limit. Subject to Underwriting||No Limit. Subject to Underwriting||Not Specified|
|Maximum Policy Term||35 Years||30 Years||25 Years||30 Years|
|Premium Payment Frequency||Annual or Semi Annual or Single||Yearly or Half Yearly or Quarterly or Monthly||Yearly||Annual|
|Minimum Premium||Not Specified||Rs 1800 p.a.||Not Specified||Rs 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.
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!!!
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