Best Term Insurance Companies in India 2023 | How to Choose the Best Term Insurance Company in India?
Updated On Jul 24, 2023
You need to prioritise the protection of your loved ones above all, no matter what happens in life. Investing in a term insurance plan is among the best ways to achieve its goal. This is a type of life insurance product that provides life cover for a limited 'term' at budget-friendly premiums. It is among the most straightforward policies available in the market and provides a death benefit in case of the policyholder's unfortunate death during the policy term.
Table of Contents
- What is term insurance?
- Who needs term insurance?
- How to choose a term insurance company?
- Best Term Insurance Companies in India
- To wrap up
What is term insurance?
Term insurance is the simplest and purest form of life insurance. It can provide you with a life cover for a defined period. If you are insured under a term insurance plan and meet an unfortunate death within the policy period, then your nominees will receive the pre-defined death benefit. The key purpose of investing in a term plan is to provide financial security to your dependents against the loss of income that could arise due to your death.
Who needs term insurance?
Term insurance is important for any person who wishes to secure the financial future of their loved ones after their death. If you are among the breadwinners of your family, then your loved ones will not only have to face emotional distress after your death but might also be under immense financial strain. In the absence of your income, your family may face problems in paying for the higher education of the kids, the monthly rent, and even basic day-to-day expenses. Moreover, if you have liabilities like a car loan or a home loan that has to be repaid, your family members would be the ones to face the burden of repayment in case of your sudden demise. Investing in term insurance would be helpful in protecting your family from such concerns. Broadly speaking, the importance of term insurance would depend on your financial dependants, liabilities and your family's financial goals.
How to choose a term insurance company?
Here are a few points on the basis of which one can select the right term insurance company:
- Claim settlement ratio: It is among the most important metric that indicates the percentage of claims settled by an insurance company. It reflects the efficiency of the insurance company in processing and settling claims. If a company has a high claim settlement ratio, it would indicate that they have a good track record of honouring claims efficiently. IRDAI, or the Insurance Regulatory and Development Authority of India, claims settlement ratios of all insurance companies annually. You can compare the ratios of diverse companies to evaluate their reliability in regard to claim settlement.
- Customer service: When buying an insurance policy, you would want to select a company that is responsive, accessible, and delivers excellent support throughout the policy application process and beyond. You must opt for companies that have knowledgeable representatives to address customer queries and concerns across varied communication channels.
- Reputation: It is prudent to check an insurance company's reputation and track record before investing in its policy. You should ideally research their history, like establishment date and financial performance, and explore customer reviews and ratings available online. You must also consider awards or recognition received by the company. A term life insurance provider who has a strong reputation and a proven track record is more likely to provide dependable service.
- Additional riders: Riders are optional add-ons that can enhance the coverage of a term insurance policy. The riders can be of many types, starting from critical illness benefit rider and waiver of premium rider to return of premium benefit. However, the extra premium has to be paid to include riders in their base-term insurance plan.
Best Term Insurance Companies in India
Max Life Insurance
Max Life Insurance Company was established in 2000 and is among the fastest-growing insurance companies in India. It is collaboration between Max Financial Services and Axis Bank. It is the largest non-bank private sector insurance company in India and has an expansive portfolio of products, impressive online presence, and multi-distribution channels. This company is driven by its goal to provide customers with appropriate financial stability. They offer multiple types of life insurance plans, starting from child insurance to policies for long-term savings.
Aegon Life Insurance
Aegon Life Insurance was incorporated in 2008 and offers a comprehensive range of insurance solutions. It is a new-age company with an impressive digital presence and a diverse product portfolio. The claim settlement of Aegon Life Insurance for the year 2021-2022 was 99.03%. This company leverages multi-channel marketing to cater to varied sections of society and offer appropriate insurance products.
Bharti AXA Life Insurance Company
Bharti AXA Life Insurance Company has a claim settlement ratio of 97.96%, with more than 200 branch offices across the country. It is a collaboration between Bharti Enterprises and the AXA Group, headquartered in Paris. In addition to term insurance plans, Bharti AXA Life Insurance Company offers children's education plans, savings plans, and ULIP plans. Their policies are designed to provide long-term value to their customers.
Life Insurance Corporation of India (LIC)
LIC is one of the oldest and largest insurance companies in India. The key role of LIC is to invest in global financial markets and diverse government certainties after amassing funds from people through life insurance policies. LIC's claim settlement ratio was 98.62% as of March 31, 2021. Life Insurance Corporation of India is the dominant insurance player in the Indian market and has a customer base of over 29 crore policyholders. It is a widely trusted insurance brand that provides excellent customer service through its branch offices, digital platform, and other tie-ups.
Reliance Life Insurance
This is a joint venture between Nippon Life and Reliance Capital. Reliance Life Insurance holds a Claim Settlement Ratio of 98.6% as on March 31, 2023. Apart from offering affordable term plans, this company also provides ULIPs, child plans, retirement plans, and more.
HDFC Life Insurance
HDFC Life Insurance started its operations in 2000 with its headquarters in Mumbai. It had a Claim Settlement Ratio of 98.66% for the FY 2021-22. HDFC Life Insurance has more than three hundred offices across the nation. It is a long-term life insurance provider, which is a joint venture between HDFC Ltd, which is a leading housing finance institution in India, and Standard Life Aberdeen, an investment company.
Aditya Birla Sun Life Insurance
This company was established in 2000, and Aditya Birla Sun Life featured a high claim settlement ratio of 98.04% in the FY 2020-21. Aditya Birla Sun Life Insurance Company was formed by the collaboration of Aditya Birla Group and Sun Life Financial. The latter is a leading international financial services organization in Canada. Aditya Birla Sun Life Insurance offers a diverse range of insurance policies, from protection to pension plans.
SBI Life Insurance
SBI Life Insurance is a joint venture between SBI Life and BNP Paribas Cardiff- the French financial institution. Its claim settlement ratio for the financial year 2021-22 is 97.05%. This company has more than nine hundred branch offices across the nation.
To wrap up
Term insurance policies provide a financial net for your loved ones in the event of your untimely demise. Investing in a policy offered by the right insurance company is important to ensure that the death benefit will be paid out to your beneficiaries as promised.
- How to determine the appropriate term insurance amount?
As a general thumb rule, one must have a life cover at least 10 times their annual income. Basically, one must have enough insurance coverage to account for their current and future liabilities and financial goals. For instance, if you have taken a home loan of INR 50 lakhs, you must ensure that your term life insurance amount is large enough to cover the liability at least.
- What should be the tenure of a term life insurance policy?
The appropriate tenure for a term life insurance policy would rely on how early you purchase the plan. The earlier you choose to invest in a policy, the longer you can be covered. You should try to purchase a policy for the maximum tenure possible. This would be particularly useful if your plan is meant to square off a loan in your absence. Moreover, it is smart to ensure that you are covered throughout your working life.
- What are the types of deaths covered under term insurance plans?
All types of death tend to be covered in term insurance, including natural death or death due to accident or critical illnesses unless excluded as specified in policy contract terms.
- What if I do not die within the term period?
The term insurance plan will terminate at the end of the policy term. Survival benefits, if any, shall be made available. On the basis of the provisions offered by your chosen insurance company, you may even renew the policy to continue life protection.
- How does term insurance work?
You have to pay regular premiums for a term insurance policy. In return, the insurance company provides coverage for the specified term. If the insured person dies during the term, the beneficiaries receive the death benefit. However, if the insured survives the term, the policy typically expires without any payout unless it has provisions for a survivor benefit.