Various insurers need to evolve the insurance policies offered to attract individuals. The customers look around for features offered which are both beneficial and economical.
The online term plans have proved to be such a product offered by the insurers. The premium rates are cheap and have many better features when compared to the offline term insurance plan. It is observed that even the most expensive online term insurance plan would be cheaper compared to the offline term insurance plan. Cheap term insurance policy can be easily looked upon by comparing term insurance policies of various insurers.
The main factor contributing to the online term plan being a cheaper option is there is no involvement of agents which eliminates the agent's commission and other administration cost which lowers the premium amount considerably.
Buying of term plan would require essential analysis of two points:
1) Finding out the cheapest plan around:
To compare different insurers with the term plan they offer and by means of analyzation, it would give us an idea as to which is the cheapest one. We could take a sample of policyholders for the ages 30 and 40, the sum assured is Rs 1 crore for a term of 20 years. Comparison of the premium rates for different insurers given below is calculated based on the premium calculation done for each plan.
Representing the data in the form of a graph
The chart explains the variation in the premium amount by different insurers. This helps policyholders decide the cheapest plan based on the premium rates comparison at different ages.
1) Is cheap term insurance policy be considered a wise choice?
The judgment of best insurers is generally based on the claim settlement ratios declared each year by the IRDA. As per this ratio the LIC has been a consistent
leader as far as claims settlement is concerned. But LIC does not provide for an online term plan and the offline version offered is one of the most expensive ones.
SO, instead of judging the insurer based on the premium rates or the Claims settlement ratio it is advisable to understand and study the insurer as per our requirements.
There is one more factor other than the Claims settlement ratio which is generally referred to along with the Claims settlement ratio while selecting the term plan or any plan in general.
This factor is known as the Solvency Ratio. It indicates how solvent the insurance company is or helps check the readiness of the insurer for meet unforeseen situations. Thus the solvency margin is the extra assets the insurance company is required to maintain above its liabilities. This asset would work as an emergency fund to meet the claims demand in case of crisis.
The IRDA requires every insurer to maintain a particular level of solvency margin to provide smooth functioning of the Claims settlement.
The chart below gives the comparative analysis of both claims settlement ratio and solvency ratio.
The data is extracted from the IRDA annual report for the years.
| Company Name | Claim Settlement Ratio | Solvency Ratio |
| LIC | 97.4% | 1.54 |
| ICICI Prudential | 96.5% | 3.27 |
| HDFC Life | 96.2% | 1.72 |
| SBI life | 95.5% | 2.04 |
| Kotak | 92.1% | 2.67 |
| Birla Sun Life | 90.9% | 2.89 |
| Bajaj Allianz | 90.6% | 2.86 |
| Max NewYork | 89.8% | 3.65 |
| Aviva | 89.6% | 5.4 |
| ING Vyasa | 88.8% | 3 |
| Bharti Axa | 87.7% | 2.14 |
| Star-Union Dai-ichi | 86.2% | 6.7 |
| Reliance | 84.6% | 1.66 |
| Tata Aig | 83.9% | 2.16 |
| India First | 82.2% | 6.36 |
| Metlife | 81.4% | 1.69 |
| Canara HSBC | 80.6% | 3.07 |
| Sahara Life Insurance | 78.0% | 4.82 |
| Future Generali | 68.1% | 2.21 |
| IDBI Fedral | 67.5% | 6.6 |
| Aegon Religare | 66.1% | 3.22 |
| DLF Pramerica | 24.5% | 2.53 |
| Edelweiss Tokio | 100% (Just 1 policy) | NA |
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