Which is the best Term Plan?   Apr 16, 2013

Are you planning to go for a term plan but don’t know which is the best term plan meeting your life insurance requirement?

In this article we have compiled the data for top most life insurance companies which can help you take a rational decision for your term insurance requirement.

Below table shows you the comparison of various term plans available in the market from different insurers.

Sr.No. Company
Mode Entry Age Minimum
Maturity Age
1 Aegon Religare iTerm Online 18-65 5 40 75 7,753
2 Aviva i-Life Online 18-55 10 35 70 8,058
3 SBI eShield Online 18-65 5 30 70 9,135
4 HDFC Click 2 Protect Online 18-55 10 30 65 10,112
5 Kotak e-Term Online 18-65 5 30 70 10,140
6 Bajaj iSecure Online 18-65 10 30 70 10,955
7 ICICI iCare Online 18-65 5 30 75 12,360
8 Birla SL Protector Plus Offline 18-65 5 30 75 14,045
9 Max Life Platinum Protect Offline 18-60 10 30 75 18,090
10 LIC Amulya Jeevan - 1 Offline 18-60 5 35 70 25,700

Note: Premium mentioned in the above table is for a 30 years Non Smoker individual for a Sum Assured of 1 crores for 20 years.

Above table shows Term plans available in 2 different modes i.e. Online and Offline.

Online Term plans are directly from the life insurance company, wherein an insurance agent is not involved in the process thus resulting in low premium for you. Offline Term plans are bought through an insurance agent, the premiums you pay for indemnifying risk to life is high when compared to online term plans.

From the above table it is clear that any person of the age of 18 years can buy a term plan while maximum entry age is 65 years for most of the companies in a term plan. Minimum tenure for most term insurance plans is 5 years, while the maximum tenure is 30 years. Only in case of Aegon Religare iTerm the maximum tenure is 40 years. Term plans can cover you upto a maximum age of 75 years depending upon the insurance company you choose but most insurers cover you upto a minimum of 70 years of age.

In the above table we have ranked life insurance companies from the lowest to highest premium for a term plan. Aegon Religare provides the cheapest term plan being an Online Term plan, while LIC has the highest premium for an offline term plan. There is a huge difference between the lowest and highest premium term plan of approximately Rs. 17,000. The main reason for such a huge difference is:

  • Insurance agent’s commission;
  • Increasing competition in the life insurance industry;
  • Difference in life insurance companies’ actuarial assumption rate;
  • Past claim settlement experience; and
  • Credit worthiness of life insurance companies.

LIC being the most trustworthy and with the highest claim settlement ratio of all the life insurance companies charges higher premium for its term plans.

So, which is the best Term plan in the market?

Well, the best term plan depends upon your requirement i.e. at what age you are opting for it and till what age you require it and the premium you are willing to pay for the term plan. Online Term plan can save your premium amount and also provide you the convenience of buying a life insurance policy but you should always check on claim settlement ratio of the insurance company from which you are buying the term plan, since it is the most important factor in deciding which policy to go for. You should also disclose your true health history while filling up the proposal form so that insurance company cannot reject claim on the ground of past health history.

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Apr 16, 2013

Helpful information giving a complete perspective on the current term plans available in the market. Couple of clarifications/suggestions -

1) Is it mandatory to continue & pay the premium for minimun term? As there are new products getting launched by various insurance companies with lesser premium, maximum tenure etc. can the term plan be closed befre the minimum term?

2) Can a person take more than one term policy from different insurance companies? 2 yrs back I had taken Aviva term plan which covered for longer duration out of all the term plans. Now I could see Aegon Religare providing maximum tenure. In this case can I take term plan from Aegon Religare and continue Aviva term plan or close it.

3) Similar to medical insurance policies can term plans be made portable across insurance companies.

Apr 17, 2013

Kindly let me know under what circumstances a genuine death claim can be rejected by any Life Insurance Co?. What is the remedy for such happening? Why LIC of India is reluctant to introduce "OnLine" pure Term Insurance?. The proponents should never mix Life Insurance (Risk Cover) with Saving / Investment as, this defeats the benefits of both the ideas \ concepts. Wise persons should go only for pure Term plans. Do not hand over your 'Investment' money in the hands of LI Cos. Let them manage your Life Risk ONLY. There are far better options available for this goal. But alas! common people mostly do not "understand" this and easily becomes the prey of mis-selling.
Apr 17, 2013

I am 44yrs old.I already have an term plan  of LIC,but it is taking very high premium compared to other online products of pvt.insurance companies.Pl.tell me a good  term which I can check out,with follwing details:
1.I want it till 70yrs.with sum insured Rs.1 Crore/2 crores
2.With/without accident benefit
3.If sum can be increased in future.

Apr 17, 2013

Dear Sir,

1) Minimum Term in a term plan means that you have to take the policy for minimum of 5/10 years (Depending upon the policy) but it does not mean that you have to pay all the premiums, in case you do not require life insurance cover before the maturity of the policy you can stop paying premiums as there are no surrender values under a term plan. If you stop paying premiums then you will no longer be covered under the policy.

2) Yes you can take 2 or more term policy from different insurers and can also claim from all the insurers in case of death of the life assured. Choosing Aegon Religare because of its maximum term will not be a wise decision, you should be covered under a term plan till your rerirement. Further you should also check claim settlement ratio and quality of service of insurer before finalising on any insurance policy.

3) As of now only Mediclaim policies are portable from one insurer to another and we dont see portability in term plans in the near future.

Team PersonalFN
Apr 17, 2013

I think rather than a pure term plan, plans which provide for additional riders viz. Accidental death,Critical illness & Accidental disability rider, at a slightly higher premium, would be a much more useful product. 
Request you to analyse the terms plans across insurance companies taking into account the additional riders factor and provide details of which term plans are best.
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