How to choose Term Insurance Plan in India


Many of the people get confused between different insurance plans. This is mainly because there is huge difference between the premiums of different insurance plans. Read this post for some tips on how to choose term insurance plans in India.

When you will compare the premiums required for term plans, you will be surprised to know that there are reasonable differences in the premium amounts. For instance, if you are 30 yrs old and want to get a term insurance of Rs 5000000, you might have to spend in between 6000- 15000 as the premium depending on the company you choose. Now any investor will think that, since any company will pay Rs 500000 in case of death, it is wise to go for the company with the cheapest term plan. In fact, this is what most of the investors do. Unfortunately, it is not a wise decision. Let us discuss the reasons in the next heading.

How to choose term insurance plan in India?

Now we come to the most important question that is how to select the best term plan. Firstly, the requirements and needs differ from one person to another. You should choose the sum insured depending on your lifestyle and future requirements. Make sure that the insurance cover is sufficient for your family in your absence; otherwise they will have to face serious financial problems. Here are the factors to consider while choosing a term plan in India:

  1. Reliability of the Insurance Company: There are about 15-20 providers which provide the term plans at present. This number will certainly increase in the coming years. While selecting a particular company for term insurance plan, make sure that the company has good reputation. In case, you have heard negative reviews about a particular company, remove it from the final list.
  2. Reviews about the company: This is one aspect that most of us overlook. When it comes to buying a mobile phone, we will always go to different websites and read reviews of the latest mobiles. Why can't we do this with the insurance providers? Just check review about the companies online and prefer the one with the highest positive reviews.
  3. Ask your friends: You can also ask your friends for suggestions. Inquire their experiences and then make the final decision.
  4. Do not rely only on a financial advisor: This is also a common mistake done by the Indian investors. Though it is advised to take financial suggestions from a advisor, you should not rely on it completely. He might suggest you the plans that provide him the highest commission.
  5. Claim Settlement ratio : Finally, you should consider this aspect too as it reflects the number of people who got their claims in the past. In simple words higher claim ratio means that your family has higher chances of getting the insurance cover paid in case of your death.


What about the prices of term insurance plans ?

Term insurance plans are always cheaper than traditional offline plans. This is because of a number of reasons. First reason is that there is no agent involved in the whole process. As a result, the insurance company need not give any commission to the insurance agent. Secondly, there is increasing competition in the field on online term plans as new companies are entering this field. As a result, the prices are being kept low.


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Comments

Author: Partha K.13 Nov 2017 Member Level: Diamond   Points : 4

In this useful article, the author has mentioned how to chose term insurance policies in India. Nowadays people are becoming more and more conscious, and they are increasingly opt for term insurance instead of money-back policies or endowment policies. This is a welcome phenomenon because peoples' preference of term insurance over money-back/endowment policies prove that they are now aware that investment and insurance are totally different and these two should not be mixed.

Now let us discuss how to choose term insurance policies. Some people chose those policies where the medical test is not mandatory. This is a totally faulty approach. The medical tests should be done for the benefits of the investors and also for the beneficiaries. Undergoing a medical test before taking a term insurance policy would minimize the chances of dispute in case of the unfortunate death of the policy-holder.

As the author has mentioned, various factors must be checked before choosing a term insurance policy. The terms & conditions must be read carefully. The exclusion clauses must be properly understood. The yearly premium of different policies must be compared. The credibility of the policy-offering insurance company must be noted. And, more importantly, the Claim Settlement Ratio of the insurance company must be checked.

I thank the author of this article for this useful article written in a easy-to-be-understood language.

Author: Natarajan13 Nov 2017 Member Level: Diamond   Points : 2

Very good article for people who have not taken a policy so far as I have been misled by a 'financial expert from a bank' and ended up paying a higher premium. If you are looking for a term policy please do not be misled into buying a ULIP with the promise that some money will be coming back at the end to us (if we survive).Applying online helps us a save money on premium if we choose a good company. There are many sites to compare the price of the policy and the death-claims to settlement ratio -
for instance https://www.mintwise.com/blog/claim-settlement-ratio-2015-2016/.

It is always better to disclose illnesses and smoking or alcohol issues upfront as this would be the common reason for not settling the claim in the unfortunate event of the demise of the policy holder. Lastly, if are buying a term policy buy it early as premiums increase as the age increases.

You can check the government website for details on term polices and the guidelines: https://www.irdai.gov.in/Defaulthome.aspx?page=H1.

Author: K Mohan25 Apr 2018 Member Level: Platinum   Points : 3

In India going for a Insurance policy is the most challenging phase every one goes through as there are different players to offer different schemes and thus we are confused. Even the agents are tilting towards a particular policy and Insurance companies and thus we are not getting the comparative benefit of each Insurance when it concerns to term Insurance. Still I believe much has to be done to create awareness in Insurance sector as many feel that Insurance is for elders and not for all.



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