Now the question was to identify the right companies that my family could rely on when I was no longer there.
I was considering purchasing more term insurance. I had a cover of 2 Crore but had realized that it was too less.
The first thing I did was to go to mintwise.com to check out the products with the lowest premium for my age profile. Unsurprisingly, smaller or newer companies offered products with lower premium.
Names like HSBC Canara, Edelweiss Tokio Life, Future Generali were visible on the screen.
But were they safe? Hope they don’t go bust. Yes. The insurance regulator IRDA has ensured that any company entering the insurance business invests more than 100 Crore in the business. Also, investment guidelines ensure that the money is invested in high rated bonds apart from a small portion in equity. Since the insurance industry got privatized in the year 2000, there has not been a single incident of any company facing solvency / bankruptcy issues.
OK. So that is good. So then should I go for the cheapest plans?
Hold on. I see some data regarding Claim Settlement Ratios. Fair enough. Let me shortlist the inexpensive companies and dig deeper into this factor about Claim Settlement. Finally, the proof of the pudding is that the family gets the money without hassle if something unfortunate happens to me.
Claim Settlement Ratio is the percentage of claims settled by each company out of all claims received. The other claims were not settled either due to inadequate paperwork or fraud.
Of course, I would prefer companies with a high settlement ratio. Max Life, ICICI Prudential, HDFC Life were tops in this parameter. Reputed brands which is further validated by high claims settlement ratios. Cool. Added to the shortlist.
Life is of course uncertain. That is the very reason I am planning to increase my life cover. But of course, the overall life expectancy is increasing as standards of living and medical technology improves. My mind starts pondering about reasons that could cause my early death.
We hear about deaths of young people in their late thirties or early forties due to cardiac arrest. Some film stars are in the news due to their battle with cancer. And accidents are a dime a dozen every day.
I do try to maintain my fitness level by eating healthy and moderately, exercising at least a few times every week and limiting the frequency and amount of alcohol consumption. Luckily, I don’t smoke. Else, that can also be a significant reason of early disease.
That said, accidents beyond a point could happen despite my best efforts. And diseases like cancer, heart disease, diabetes could strike anyone.
I concluded that if I die early, it might happen due to an accident or a critical illness like cancer. I am aware that insurance companies offer a higher protection if death occurs due to these reasons by paying a moderate additional amount. In some products, the critical illness cover is already inbuilt. ICICI Prudential, HDFC Life, Aegon Life and HSBC Canara have products with an inbuilt critical illness cover. Sweet.
Yes, that makes sense. People should buy term plans (life insurance policies) from companies that offer a critical illness cover and accident rider but with a reasonable premium and a high claim settlement ratio.
Armed with this realization, mintwise.com quickly gave me the right shortlist of companies.
Sum Insured 1 crore
|Protect||Premium Age 30||Premium Age 40||Inbuilt Features||Riders|
|ICICI Prudential Life – iProtect Smart Plan||Rs 7,263||Rs 12,030||
|HDFCLife Click2Protect 3D Plus Plan||Rs 7,258||Rs 11,999||
|Max Life – Online Term Plan Plus||Rs 6,726||Rs 10,856||
|Aegon Life – iTerm Plan||Rs 6,029||Rs 10,474||
|Canara HSBC – iSelect Term Plan||Rs 5,777||Rs 9,775||
|Edelweiss Tokio Life – Total Secure+||Rs 5,747||Rs 9,698||
*All Premiums for Males for a Term of 10 Years.
**Slightly higher premium for Riders.