As life is full of uncertainties, having a term life insurance plan becomes essential. Though there are an array of life insurance companies providing term plans in India, choosing the right plan is important as it’s all about securing the financial future of your family. With this, you also need to look for choosing a term plan by a company that provides 100% claims support.
So to help you buy the best term plan, here is a list of five best term life insurance policies in India.
But before that let’s understand what a term plan is and how it benefits you.
What is a term insurance plan?
Simply put, a term insurance plan is a type of life insurance plan that secures your family’s financial future on the account of your unfortunate demise. If the policyholder dies during the tenure of the policy, then the beneficiary receives the sum assured. And if the policyholder survives the term of the policy, then he/she will have to forgo the premium paid.
If the policyholder opts for the return of premium term plan, then on maturity, he/she is eligible to receive the premium paid. However, it is essential to note that a return of premium plan would cost you a much higher premium than a simple term plan.
For example: If Anish, a 23-year old, non-smoking individual opts for a simple term plan with sum assured of 1 Cr till the age of 70 years, then he will have to pay an annual premium of Rs. 9, 806. But, if Anish opts for a return of premium term plan then he will have to pay a premium of Rs. 18, 705 which is almost the double amount of a simple term plan.
Benefits of buying a term insurance plan
Term life policy is one of the simple types of life insurance policy to understand as you have a clear idea about the premium you are paying and the amount your beneficiary will receive on your death.
To know further, here are a few benefits of term insurance plan that you need to know:
• The premium for a term life insurance policy is low since it only covers financial risk and there is no investment component covered.
• The premium of a term life insurance plan remains fixed all throughout the term of the policy. This means that if at the age of 24, you are paying a premium of 9,000 annually, then even at the age of 45, you will have to pay the same amount.
• Policy term can be for a term of 5 years up to 60 years.
• The minimum age to buy a term insurance plan is 18 years and maximum age limit is 65 years.
• You can avail coverage from 25 lakh up to 5 crore and above.
• The premium paid is also exempted from taxation up to a maximum of 1.5 lakh under section 80C of the Income Tax Act, 1961.
• Premium payment mode can be on a monthly, yearly or a lump sum basis
• You can enhance the coverage of your term plan by opting for riders such as waiver of premium rider, permanent disability rider, critical illness rider, accidental death benefit rider, women critical illness rider and accidental death benefit rider.
• You also have an option to choose the pay-out as whether you want the nominee to receive the lump sum amount in one go or in the form of monthly or yearly payments.
• A term life insurance policy is one of the best life insurance policies to purchase to meet any financial obligation such as repayment of a home loan, car loan and personal loan.
Factors you need to consider while buying a term insurance plan:
Claim settlement ratio: While buying a term insurance plan, always check the claim settlement ratio of the company. This ratio defines the number of claims settled by the insurer out of all the claims received. This is one parameter that plays a vital role and helps you choose the best insurance company. So always opt for a company that has a high settlement ratio as higher the claim settlement ratio, better the insurance provider.
Time taken to settle a claim: Today, online portals give you information about the average time taken by a company to settle the claims received. This plays an imperative role as time taken to settle a claim speaks a lot about the company and also gives you an idea on whether you can entrust them with the responsibility of providing the financial benefits to your family.
Financial status or strength of the company: The bigger the company better it is for you as you know and are confident that they have the muscle to manage contingencies in a much faster way. This also gives you the confidence to choose the right term plan by a good life insurance company.
History of the company:
Websites today review various insurance products based on which you can have clarity if the insurer adheres to the clauses mentioned in the policy documents.
Top five term plans in India
1. LIC e-term insurance plan:
One of the oldest and trusted life insurance companies in India, the LIC e-term insurance plan is one of the top term plans in India.
Features of LIC e-term insurance plan:
• Minimum entry age is 18 years and maximum entry age is 60 years
• Policy term is 10 years-35 years
• Minimum sum assured is 25 lakhs and maximum has no limit
• The plan provides cover for all kinds of death including accidental death.
• It does not provide cover for suicide during the first year of the purchase of the plan
• As in FY 2016, the claim settlement ratio of LIC is 98.33%
2. Aegon Life iReturn Insurance Plan:
Aegon life insurance provides one of the best term plans in India that give you high coverage at affordable costs. If you are looking for a return of premium plan, then the Aegon Life iReturn Insurance Plan would be the best plan for you.
Features of Aegon Life iReturn Insurance Plan:
• The minimum entry age for this plan is 18 and maximum is 65 years. The maturity age of this plan is 75 years.
• You can enhance the plan with optional riders such as Aegon life critical illness rider, Aegon Life Women Ci rider Aegon Life Accidental Death riders and others.
• If the policyholder outlives the term, then the premium is paid back to him. And if he dies anytime during the term of the policy, then the sum assured is paid to the beneficiary.
• As in FY 2016, the claim settlement ratio of Aegon Life Insurance is 95.31%
3. Max Life Online Term Insurance:
Having over 3 lakh customers in India, Max Life insurance offers one of the most affordable term insurance plans in India.
Features of Max Life Online Term Insurance:
• Minimum entry age for this plan is 18 years and maximum is 60 years
• Minimum sum assured is 25 lakhs and maximum is 100 crores.
• Policy tenure is 10 years to 40 years
• Minimum sum assured is 25 lakhs and maximum is 100 crores.
• You can enhance the plan with a comprehensive accidental death benefit rider
• As in FY 2016, the claim settlement ratio of Max Life Insurance is 96.59%
4. TATA AIA Life Insurance iRaksha Supreme:
Standing true to its name, TATA AIA Life Insurance iRaksha Supreme secures your family’s financial needs in the most affordable ways.
Features of TATA AIA Life Insurance iRaksha Supreme
• Minimum entry age is 18 years and maximum age is 70 years
• Low premium rates for non-smokers and female lives
• There is no maturity benefit offered under this plan
• You can opt for premium payment option-regular pay, single or limited pay (5 to 10 years)
• You can pay the premium on an annual and semi-annual basis
• As in FY 2016, the claim settlement ratio of TATA AIA Life Insurance is 96.80%
5. SBI Life eShield Term Insurance Plan
Awarded with the best life insurance company award in the year 2016, SBI life eShield term insurance plan is one of the affordable term plans in India.
Features of SBI Life eShield Term Insurance Plan
• Minimum sum assured is 20 lakhs and maximum has no limit
• Minimum entry age is 18 years and maximum is 60 years
• You can enhance the plan with the accidental death benefit rider.
• As in FY 2016, the claim settlement ratio of SBI life insurance is 93.39%
Hope the above answer suffices your need to know about the best term plan and will help you opt for the best term insurance plan for securing your family’s financial future.
Sneha Lukka: Author Bio
A girl having taste for good English, clean writing and comfortable clothing. On weekdays, you will find her writing for insurance and on weekends you will spot her blogging for her parenting and food blogs. She believes that the best way to live life is to be independent from everything.