How to choose Best Term Insurance Plans in India
Do you know the best term insurance plans in India? Do you think buying a term insurance plan from best insurance company would be sufficient? Do you have all the information on which you can decide the best term insurance plans? Today we would discuss about the factors which contributes in choosing the term insurance plans which are best.
What is term insurance plan?
Term insurance plan is life insurance which provides coverage at a fixed premium for a limited period of term. After the period expires, coverage at the previous paid premiums is no longer guaranteed and customer would forgo coverage unless renewed.
Why you should buy term insurance plan?
Term insurance plans are available with low premiums. Since there is no maturity amount attached, these term insurance plans are available with low premiums. These plans would provide coverage for higher insurance with low premium.
How to choose best term insurance plans in India
Broadly there are 3 factors which would effect in choosing the best term insurance plans
1) Check high claim settlement ratio: The important factor of selecting any term insurance plans or any other insurance plans is claim settlement ratio. Claim settlement ratio is nothing but the no. of claims the insurance company has settled over the total claims received. Say if an insurance company has received 100 claims, but settled only 90, it would be 90%.
- If you are not there and your family is supposed to receive the insurance claim, but insurance company has rejected this. Then why you need to buy the term insurance plan? Hence it is important that you check the claim settlement ratio before taking the policy.
- However there are various factors which would affect your claim rejection.
- When you buy an insurance policy, do read all the terms and conditions. Your agent might be hiding certain conditions where later the claim might get rejected.
- Disclose all factors like whether you are smoker and drinker. If you hide this and it would get detected later on when you are not there, there are 100% chances that your family claim gets rejected
- When you are taking multiple insurance policies, you better disclose them. There are chances that the data might be incorrect in some of the policies and it would be a positive point to insurance company to reject any such claims at a later point of time.
You can get the claim settlement data from IRDA website –> Annual reports (www.http://www.irda.gov.in). The latest report was released in Nov-12 pertaining to 2011-12 and below is the snapshot from the report.
2) Do not look just low premium term insurance plans as best: If you are thinking of choosing a term insurance plan which offers with low premium, then you might be wrong. Low premium could be a factor but cannot be only factor. Low premiums term insurance plans might have several conditions attached to process the claim. Know them upfront, else your family would be trouble at later point of time.
3) How good the insurance company is? There are several private insurance companies which came in the last few years. People still trust Life Insurance Corporation. If you see above data it says claims settlement ratio is 97.42% for LIC. Now you believe why people believe LIC. I do not say you should not go for private insurance companies. But how the companies are able to build trust among the insurers is the question we should ask. One of the methods of check is looking at the growth in insurance policies taken the insurers from an insurance company.
4) Comparison of terms and conditions: Another factor can be, to look at the terms and conditions of various insurance companies offering term insurance plans and choosing the best one among them. This is a tricky one as there are no standard rules as to what is the impact of such terms and conditions.
5) Take two term insurance plans: One way of diversifying the risk is taking two term insurance plans from two different insurance companies. In case there is a rejection from one company, you can still hope to get claim from another insurance company.
Conclusion: Choosing a best term insurance plans is easy once you know the factors which would affect it. I feel the above 5 factors would definitely help in choosing the good term insurance plans.
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Topic: How to choose best Term insurance plans in India