I, Mrs. Latha Mukund, have been in the insurance industry since 2001 and have been a MILLION DOLLAR ROUND TABLE member. I am an author of a book on finance titled ‘FUNDAMENTALS OF FINANCE – A GUIDE TO FINANCIAL LITERACY’.
In this article we will take a look at the top five term insurance plans and the associated life insurance companies.
Term insurance is the best way to safeguard your family against an uncertain future. In case of an untimely death the financial needs of your family will be jeopardized. Hence term plans act as risk cover that will minimize the financial risks.
Finding the right term insurance plan is imperative for an individual with dependents. There are a wide range of term insurance plans provided by different insurers. This article will give you a better understanding of the same. There are different parameters to be considered before selecting the right plan. The first point is to choose the plan as per your suitability and requirement. Also take into account the maximum possible cover offered by the insurer. The second point is to look for an insurer who has a good market reputation in terms of settlement of claims and also the brand value. A higher settlement ratio indicates reliability. The last but not the least, study the features & other options provided by the insurer so as to suit your requirement. The price you pay for the insurance cover and the duration opted also plays an important role. Sometimes there are inbuilt features and benefits that come with an extra cost. Therefore the price you pay towards buying an insurance plan should not be the sole criterion in deciding on an insurer and the plans offered by them.
Let us take a look at the 5 best term insurance plans of 2021-
1) ICICI PRU I PROTECT SMART BY ICICI PRUDENTIAL.
2) MAX LIFE TERM PLAN BY MAX LIFE.
3) TATA AIA LIFE INSURANCE MAHA RAKSHA SUPREME BY TATA AIA.
4) HDFC LIFE CLICK 2 PROTECT 3DPLUS BY HDFC LIFE.
5) AEGON LIFE ITERM BY AEGON LIFE.
ICICI PRU i protect Smart by ICICI PRUDENTIAL: ICICI is one of the first private sector life insurance companies in India and a well reputed brand. Iprotect smart is one of the first term plans in the industry that offered claim payment on diagnosis of any of the 34 critical illnesses. The different features & benefits offered by this plan are discussed herewith.
1) Offers protection to you & your family against death, terminal illness & disability. In case of terminal illness the money is paid on diagnosis of any of the terminal illnesses and in case of disability due to an accident the future premiums will be waived and the cover continues till the end of the term. (inbuilt features of terminal illness & waiver of premium).
2) Provides whole life coverage till the age of 85 or 99.
3) Flexibility in terms of premium payment wherein you can opt for a limited pay, regular pay or single pay. Also, there are different modes of premium payment like annual, semi-annual and monthly.
4) Enhancement of protection offered through riders at an additional cost. This is discussed below in Life plus option and Life & health option.
5) Option to increase your life cover at various milestones on payment of additional premium. On marriage the life cover can be increased up to 50% and thereafter upto 25% in case of the birth of first and second child respectively.
6) There are various options to choose your level of protection…
- Life option: Death Benefit will be paid to the nominee in case of death or diagnosis of terminal illnesses whichever comes first. On diagnosis of permanent disability due to an accident the future premiums will be waived off.
- Life Plus option: In addition to the above option you are also covered under Accidental Death Benefit wherein your nominee will receive a lumpsum amount in case of death due to accident.
- Life & Health option: In addition to the above benefits under life option you are also covered for critical illness benefit. You will be paid a lumpsum as a critical illness benefit on diagnosis of any of the 34 critical illnesses specified in the contract.
- All in one option: As the name suggests you will be covered for all the above-mentioned options.
7) Need based benefit payout: your nominee can choose to receive the death benefit either as a lumpsum payment or on a monthly income basis depending upon the needs. They are as follows:
- Lumpsum: As the name suggests the death benefit is paid as a lumpsum to the nominee
- Income: In this option 10% of the lumpsum benefit is paid in equal monthly installments upto 10 years
- Increasing income: The benefit amount is payable on monthly instalments for 10years starting with 10% of the benefit amount per annum in the first year. The income amount will increase by 10% p.a. every year thereafter
- Lumpsum plus income: Here the nominee can split the benefit amount into amount based on the need and the balance will be paid in equal monthly installments for 10years.
8) Special benefits for women: Low premium rates and option to cover breast cancer & cervical cancer under critical illness.
CLAIM SETTLEMENT RATIO: 98.06%.
MAX LIFE SMART TERM PLAN: MAX LIFE is one of the largest non-bank private sector life insurer in India. The following are the features and the benefits of the plan:
- Offers longer coverage duration of up to 85years.
- Return of premium benefit in case the policyholder survives the entire term.
- Option to increase your life cover at various milestones like on marriage, child birth (upto2 children) and also in case of home loan liability.
- Flexibility in terms of premium payment like single pay, regular pay or limited pay and also to choose the frequency viz monthly, annually, semi- annually & quarterly to make your premium payment as per your convenience.
- Offers enhanced protection against death, disability and critical illness by adding the waiver of premium plus rider and against accidental death by adding the accident cover rider by paying an additional cost. Also, a lumpsum payment will be given in case of diagnosis of any of the 40 critical illnesses as specified in the contract.
- There are different variants to choose your death benefit payout:
- Life cover: In this option the death benefit chosen is paid as a lumpsum
- Income protector: In this option a fixed level monthly income is paid for 10years,15years or 20 years.
- Inflation plus Income Protector: To counter the effects of inflation an increasing monthly income of upto 10% is paid every year for 10 years,15 years or 20 years.
- Life Cover plus Income: in this option a lumpsum death benefit is paid along with a fixed monthly income for 10years.
- Life Cover plus increasing income: Here again a lumpsum death benefit is paid alongwith an increasing monthly income upto 10% every year for the next 10 years.
- Increasing Life Cover: In this option the life cover increases by 5% on each policy year up to the 21st policy anniversary.
- Decreasing Life cover: In this option the life cover will decrease by 5% on completion of every 5 years. You can exercise this option only if you are life cover chosen is equal to or greater than 1cr.
Low premium rates for female policyholders.
CLAIM SETTLEMENT RATIO: 98.74%.
HDFC CLICK 2 PROTECT 3D PLUS offered by HDFC Life: HDFC is one of the leading life insurance companies in India and also a well-known brand. Following are the features of the plan.
- Provides financial security to your family wherein an entire sum assured as a lumpsum payment is paid either on death or on diagnosis of terminal illness (an inbuilt feature) whichever occurs earlier. 3D stands for death, disability and disease.
- Feature of inbuilt waiver of premium available in case of accidental total permanent disability or on diagnosis of any of the critical illness as specified in the contract.
- Offers of flexibility of premium paying terms and also the various modes of payment viz. Annual, Semi-annual, monthly and Quarterly.
- Option to enhance your life cover at various milestones on payment of additional premium. For eg..On marriage-50%, on the birth of 1st and 2nd child 25% respectively.
- Allows you to enhance your cover through a top-up cover option right from the first policy anniversary onwards by paying an additional premium.
- Provides whole life cover option till age of 99.
- Special premium rates for female policyholders is available.
- Riders are available at an extra cost. They are:
- Income benefit rider on accidental disability: In this rider 1% of rider sum assured is paid on a monthly basis for the next 10 years in case of disability due to accident.
- Critical illness plus rider: A lumpsum benefit equal to the rider sum assured shall be payable in case you are diagnosed with any of the 19 critical illnesses and survive for a period of 30days from the date of diagnosis.
- Life option: In this option a lumsum benefit is paid to the nominee either on death or on diagnosis of terminal illness whichever comes earlier.
- 3D Life option: In this option an additional benefit of waiver of premium is available in case of diagnosis of critical illness in addition to the Life option.
- Extra Life option: In this option an extra sum assured is offered upon accidental death in addition to the Life option.
- Income option: In this option a lumpsum benefit along with a regular stream of income is provided to the nominee.
- Extra Life Income option: In addition to the benefits under the Income option an additional lumpsum and income benefit is paid upon accidental death.
- Income Replacement option: In order to provide a regular stream of income to your nominee in your absence this option provides an increasing regular monthly income.
- Return of Premium: In this option the total premiums paid till date will be returned to the policy holder in case he survives the entire term.
- Life Long Protection offer: As a protection for entire life the nominee gets a lumpsum amount either on death or diagnosis of terminal illness whichever occurs first.
- 3D Life Long protection: In addition to the benefits under option no 8 an additional waiver of premium is allowed in case of diagnosis of any critical illness as specified in the contract.
Kindly note that in all the above 9 options the future premiums will be waived in case of accidental total permanent disability and the policy will continue.
CLAIM SETTLEMENT RATIO: 99.03%.
TATA AIA LIFE INSURANCE MAHA RAKSHA SUPREME: Tata as we all know is an another well-known brand. This is a pure term insurance plan.
The following are the key features:
- Offers life coverage upto the age of 85 or whole life coverage upto the age of 100.
- Inbuilt payout Accelerator benefit that pays 50% of the basic sum assured chosen at inception in the event of diagnosis of terminal illness.
- Option to enhance your life cover at various milestones in life with life stage plus option by paying an additional premium.
- Offers enhanced protection through riders by paying an extra cost. Accidental Death & Dismemberment rider pays a lumpsum amount in case of death due to an accident and a percentage of the sum assured as specified in the contract is paid out in case of dismemberment.
- Flexibility in terms of premium payment wherein you can opt for a single pay, regular pay or limited pay. Also the four modes of premium payment like monthly, half-yearly, quarterly and yearly is available.
- Since there is a pure risk cover plan there is no survival benefit.
- Special premium rates for females.
- Minimum life cover offered by the plan is 50 lacs.
CLAIM SETTLEMENT RATIO : 99.07%.
AEGON LIFE iTERM INSURANCE PLAN: Aegon is one of the leading financial services organization providing life insurance, pension and assets management. Aegon Life was formed with the coming together of Aegon N.V.,an international provider of life insurance, pensions and asset management and Bennett Coleman& company, india’s largest media conglomerate popularly known as Times Group. Let us take a look at the various features & options provided by the above-mentioned plan:
- Choice of cover till the age of 100years.
- Immediate issuance of life cover with an inbuilt instant cover benefit. It provides life cover right away after receiving the completed application form along with the requisite premium payment without having to wait for long for the coverage to begin.(subject to underwriting)
- Incentive for smokers by providing discounted premium rates on renewals under the “IT PAYS TO QUIT SMOKING” Benefit.
- Reward for switching to a healthy lifestyle by providing preferential rates under the “GO HEALTHY” Benefit.
- Feature of inbuilt terminal illness.
- Low premium rates for female policyholders.
- Flexibility of premium payment like regular pay, single pay or limited pay. Various modes of of premium payment available like Annual, Semi-annual & Monthly.
- Option to enhance your life cover at various life stages on payment of additional premium: 50% on marriage, 25% on birth of first and second child respectively and 100% on Home loan disbursal.
- Flexibility to choose the Death Benefit payout:
- As a lump sum payment, or
- As a fixed monthly income for 100 months, or
- As a combination of the above.
Add on riders available for an additional cost against accident and critical illness by paying an additional cost. In case of critical illness a lumpsum amount will be paid on diagnosis of any of the 36 critical illnesses specified in the contract and incase of death due to an accident a lumpsum amount equal to the rider sum assured will be paid.
- Flexibility to choose from 3 different plan option based on your needs:
- Life protect: under this option the sum assured will be paid either on death or diagnosis of terminal illness whichever comes first.
- Protect Plus: In addition to the benefit under life protect an option to increase your life cover from the start of the second policy year at 5% till the age of 55 to counter the menace of inflation.
- Dual Protect: This option provides for dual protection of life cover for the entire policy term along with regular monthly income post your earning years till maturity or death or diagnosis of terminal illness whichever comes first.
CLAIM SETTLEMENT RATIO: 96.45%.
COVID-19 CLAIMS ARE COVERED IN ALL THE ABOVE TERM PLANS.
To conclude the whole thing I would suggest you study the plans that are discussed above thoroughly and take a decision that would suit your needs & requirements. As an advisor I would recommend you buy products that come with critical illness benefits. In case of diagnosis of any critical illnesses the earning capacity of an individual is hampered. So in order to take care of your financial needs at such times a lumpsum amount is paid on diagnosis of any of the illnesses & in some cases also the future premium is waived off. All the companies mentioned above have a proven track record, offering the best of products with excellent features and benefits. The need of the hour is to arrive at a buying decision at the earliest so as to secure our family’s future thereby ensuring peace of mind.