Term insurance a must; But lowest premium not necessarily the best

Term insurance plan is a necessity for an individual who has dependents or a family. It is the basic form of life insurance where a fixed sum assured is paid on the death of the policyholder. In case of survival of policy term, the insured doesn't get anything in return. It works on the basic principles of life insurance with maximum coverage at minimum cost with no additional benefits.
While looking for a term insurance policy, we generally always go with the company which gives the best deal in terms of the lowest insurance premium or give added benefits, ignoring a very essential aspect which is the claim settlement ratio of that company.Claim settlement ratio is the number of policies that are settled by paying back the claims in case of death as a percentage of claims made. High claim settlement ratio shows the insurer is reliable and could be trusted for taking term plans.
We must remember that a term plans comes into effect only due to the unforeseen/unfortunate & untimely death of the insured person & at this time of distress any settlement not made by the insurance company to the dependents would not only defeat the entire purpose of taking a term plan but also put the family in financial stress.
Let us look at the claim settlement ratio of term insurance providers according to IRDA in the year 2015-2016.
Insurance Provider
Death claims received
Claim settlement ratio
Death claims paid
Claims pending
Average value/claim (Rs)
LIC
7,55,901
98.19%
7,42,243
0.50%
1,20,654
Max Life
9,223
96.23%
8,804
0.10%
2,78,816
ICICI Prulife
12,309
96.20%
11,546
0.80%
3,05,612
SBI Life
14,876
95.70%
13,303
3.20%
2,29,572
AegonReligare
460
95.30%
413
0.20%
7,44,068
HDFC Std
12,189
95.02%
11,031
2.30%
2,38,890
Reliance Life
18,142
95.01%
15,211
5.80%
1,50,726
Tata AIA Life
3,873
94.47%
3,659
1.00%
2,41,241
Star Union Daichi
1,266
94.08%
1,191
0.30%
2,85,306
Canara HSBC
576
92.99%
516
3.10%
5,58,333
PNB MetLife
2,466
92.90%
2,290
1.50%
4,48,821
Bajaj Allianz
20,661
91.30%
18,978
3.00%
1,83,291
Kotak Mahindra Life
2,686
90.73%
2,437
3.20%
2,96,143
Future Generali
2,160
90.61%
1,808
1.80%
1,71,128
Sahara Life
778
89.97%
700
3.60%
91,143
Birla Sunlife
8,436
88.45%
8,055
1.70%
3,45,241
Exide Life
3,432
86.10%
2,955
1.60%
2,03,519
Edelweiss Tokio
119
85.10%
68
5.00%
10,64,706
IDBI Federal Life
1,017
84.79%
736
4.30%
4,26,902
Aviva Life
1,690
82.00%
1,396
0.50%
7,68,266
Bharti AXA Life
1,112
80.00%
900
2.90%
3,94,667
India First Life
1,655
72.21%
1,195
5.00%
2,49,540
Shriram Life
1,960
65.66%
1,307
11.20%
2,53,481
DHFL Pramerica
953
57.19%
545
6.50%
2,74,128

*Source IRDA/Policybazar.com

Looking at the Claim settlement ratios of various companies it is clear that LIC of India, Max Life, ICICI Pru Life & SBI Life have the best claim settlement ratios & thus the possibility of claims being settled to your dependents are maximum.

Do the TIP before a SIP

Make life insurance an integral part of your financial plan….

Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named 'The Tortoise' 

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