Best Term insurance plan to buy in India 2021

We all need a term life plan in 2021, majorly because of this pandemic. Life is totally uncertain as well as unpredictable. I know that most of the people here, have family and they might be dependent upon you. Maybe you are the only bread earner of the family and if anything happens to you, then who will look them after you. So, you can’t procrastinate in this case, and through this blog, we will guide you in choosing the “Best term Insurance plan to buy in India 2021”, which are currently available in the market.

term insurance plan

Buying life insurance is not an easy task, because you are going to take your life’s most important decision that is “Financial planning”. You will do deep research, check premium as well as the market reputation, and many other things before choosing any life insurance company, You are taking security for your life and if anything happened then the insurance company will be responsible for your family’s financial stability.

There are many things that you have to look at before buying any term life insurance, offline or online.

Claim settlement ratio.

The important question while choosing the term life plan is the claim settlement ratio of the company. It is calculated as the total number of claims received against the total number of claims settled. Let us say, Life Insurance Company received 100 claims and among those, it settled 98, then the claim settlement ratio is said to be 98%

Basically, you can choose any company with a 95% claim settlement ratio. What if you pay all the premium on time but when the time comes and your family needs insurance amount, the insurance company rejects your claim. So always choose the company wisely with proper research.

Amount settlement ratio

Everybody discusses the claim settlement ratio but nobody talks about the amount settlement ratio. This is also a very important factor while choosing the term life plan. So what is the amount settlement ratio/

Suppose the insurance company received 100 claims and they settled 98 claims of 10 lakh rupees amount each but for the remaining two claims, they denied because the amount is huge, 1 cr individual. In that case, the claim settlement ratio is 98% but the amount settlement ratio is just 83%So, always consider this factor also, while buying any term life insurance.

amount settlement ratio

Solvency ratio

The solvency ratio is the amount of assets held by the company against the liability. Its always better to have a high solvency ratio because the company can able to handle all the claims even in the situation of financial crises.

The minimum solvency ratio that must be maintained by the insurance company is 1.5 ratio, It changes every quarter.

Solvency ratio
graph by labour law advisor

Claim rejection ratio

It is the number of claims rejected by the insurance company up front. This is also important for you to consider this factor before choosing any term insurance plan. We have shortlisted the companies which have less than a 1% Claim rejection ratio.

claim settlement ratio
chart from labour law advisor

Assets under management (AUM)

It is basically the funds managed by the company and it is also beneficial to settle claims under the situation of any crisis in the country.

Let’s take the example of a mutual fund with a diversified portfolio of stocks and bonds and a significant cash position. Let’s suppose that the mutual fund’s portfolio consists of Rs 1.5cr. in stocks, Rs 2cr. in government bonds, Rs. 1.5cr in corporate bonds, and Rs.1cr in cash

The total value of the fund’s assets under management will be 6cr.

So, these are the basic factors that you have to consider before choosing any term/life insurance plan in India. Now after comparing all the factors, we came up with 3 top companies for term life plans and that is TATA AIA, HDFC, and LIC.

TATA AIA

Tata AIA Life Insurance Company Limited (Tata AIA Life Insurance) is a joint venture company, formed by Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA). Tata AIA Life Insurance combines Tata’s preeminent leadership position in India and AIA’s presence as the largest, independent listed pan-Asian life insurance group in the world, spanning 18 markets in the Asia Pacific region.

2019-20

No. of Branches

Claim Setlled amount

Solvency Ratio

Claim Repudiated

Claim settlement ratio

Amount settlement ratio

Total Premium 

N/A

N/A

2.68%

N/A

99%

96%

269 billion

Features and benefits

Tata AIA Life Insurance Sampoorna Raksha is a pure term insurance plan that provides financial protection to your family, below are the benefits and features of the plan.

  • The company provides a free look period of 15 days which means if you disagree with the policy term, you can cancel the plan within 15 days from the inception of the plan
  • Females and non-smokers can avail extra benefits by paying less premium,
  • On survival of the policyholder till the maturity of the term, all the premiums are paid back to the policyholder
  • On death, The benefit will be paid immediately to the nominee after the death of the life insured or, the sum assured is payable on death, and monthly income is provided for the next ten years.
  • The insured can also surrender his/her policy after 2 years of fully paid premium. The surrender value payable to the policyholder is guaranteed surrender value or the special surrender value, whichever is higher.

HDFC Life

HDFC Life Insurance Company Limited is a joint venture between HDFC Ltd., one of India’s leading housing finance institutions, and Standard Life Aberdeen, a global investment company.

2019-20

No. of Branches

Claim Setlled amount

Solvency Ratio

Claim Repudiated

Claim settlement ratio

Amount settlement ratio

Total Premium 

420

569cr.

1.88%

552cr.

99%

91%

327billion

Established in 2000, HDFC Life is a leading long-term life insurance solutions provider in India, offering a range of individual and group insurance solutions that meet various customer needs such as Protection, Pension, Savings, Investment, Annuity, and Health. They also provide the best Term Insurance plans in India.

Features and benefit

  • HDFC term insurance plans are cost-effective and affordable with premiums that anyone can afford and it doesn’t put any financial burden on you.
  • They provide a lot of flexibility in choosing the term plans as per your individual requirements.
  • Tax benefits can be availed under sections 80C and 10(10D) of the Income Tax Act, 1961.
  • A varied range of add-on riders available with basic term insurance plans which enhance their effectiveness
  • On the death of the policyholder during the policy term, term insurance either offers a mix of lump sum and monthly income or lump sum with increasing monthly income, as opted for by the policyholder

LIC Term Plan

Life Insurance Corporation of India (LIC of India) is a leading life insurance company headquartered in Mumbai. LIC is the largest life insurance company in India with an asset value of over 2,529,390 crores. LIC of India was established on 1st September 1956. It operates and functions under the Central government. LIC has more than 50% share in the total life insurance market.

market share of insurance companies

Being one of the oldest and largest government-owned life insurance companies, LIC of India continues to be the dominant life insurer even in the liberalized scenario of the Indian insurance sector. For over years now, the company is surpassing its own past records.

2019-20

No. of Branches

Claim Setlled amount

Solvency Ratio

Claim Repudiated

Claim settlement ratio

Amount settlement ratio

Total Premium 

2048

13,694cr.

1.60%

12,798cr.

97%

95%

3.79 trillion

Features and benefits

Jeevan Amar is one of the best term plan offered by LIC. You can check its features and benefits form below,

  • It offers policyholders the flexibility to select from two death benefit options – the level sum assured and increasing sum assured.
  • Special rates for women
  • Two categories of premium rates – non-smoker rates and smoker rates
  • The benefit of high sum assured rebate
  • Tax Benefits are also given since it’s an insurance product. The insured can avail benefits on premium paid under section 80d and the beneficiary will get tax benefit on maturity or death claim under section 10(10d).

Which is the Best term insurance plan among these?

TATA AIA, HDFC, LIC are all the best insurance company and you can choose any one of them. TATA AIA and HDFC life are the private players while LIC is owned by Government and people have more trust in LIC. But on the other side, you get more benefits and have to pay less premium in HDFC and TATA.

If you want to choose a safer side and don’t want to take any kind of risk with your hard-earned money then you can simply go with LIC. But If you want to avail all the major benefits and features, then you should choose TATA AIA rather than HDFC life because it offers the highest claim settlement ratio, amount settlement ratio, solvency ratio, and lowest claim rejection ratio.

Bonus point

The insurance company has the right to deny the claim if anything missing from the insured side. Discuss all the things regarding your health, previous surgery, disease, or whether you smoke or not. Don’t hide anything while buying the policy, disclose all the things. If you save a bit premium by hiding something today from an insurance company then you will pay for it in the future.

Since the company is giving a huge amount, they will do a detailed investigation before the settlement of the claim. And according to the survey, most claims are rejected in term life plans as compared to other types of insurance such as Endowment or Whole life insurance

And if you are still confused about buying a term life plan then just book a free Appointment call with us and our team will reach out to you and provide you further assistance.

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