Life Insurance
What is a Life Insurance Policy?
Life insurance policy is an agreement between the life insurance company and the policyholder, where the insurance company would pay a predetermined sum assured to the beneficiaries of the policy in case of an unfortunate death of the policyholder during the policy period. The policyholder pays a premium monthly, annually or as a lump sum to the insurance company to avail this life cover.
Life insurance is one of the most essential investments for those having dependents since it acts like a backup plan in securing your family’s future with an assured amount of money in your absence.
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Best Life Insurance Policy in India
EquitySeeds Consultants offers guidance in getting a life insurance policy from the below list of life insurance companies in India:
Life Insurance Policy:
Below are the top selling life insurance policies at EquitySeeds:
Benefits of Life Insurance in India:
There are several benefits you get on buying life insurance schemes in India, some of which are mentioned below:
Life insurance schemes in India provide financial security to the policyholder by assuring the financial stability of the beneficiaries in case of an unfortunate death of the policyholder.
As per the terms and conditions stated in the life insurance policy, a predetermined sum assured is given as a death benefit to the beneficiaries in case of an unfortunate death of the policyholder.
A few life insurance schemes in India provide maturity benefits to the policyholders by returning the premiums paid if the policyholder survives for the entire policy period. Example – Term Insurance, Retirement plans.
A few life insurance schemes in India provide guaranteed returns on maturity. The lump sum amount received on maturity can be used for any of your financial needs. Usually, an individual buys these schemes for an expected huge expense in future such as a child’s higher education fee, repayment of a loan, etc. Example – Endowment plans, Money Back plans.
A few life insurance schemes in India provide an opportunity to create wealth by allowing the policy buyer to invest a portion of their premiums in equity funds, debt funds and other financial securities. Example – ULIPs, Endowment Plans, etc
You can avail tax deductions of up to Rs. 1.5 lakhs under Section 80C of Income tax Act by getting a life insurance policy, further you can also avail tax benefits under Section 80D on buying additional riders on your main policy. Tax exemption under Section 10(10D) is also provided for pay-outs received from the life insurance companies in India.
You can opt for additional riders such as critical illness, personal accident, etc to increase the scope of your insurance coverage.
Life insurance companies in India allow flexibility in payment of premiums on monthly, quarterly, annually or even in lump sum.
A few life insurance schemes in India provide the policyholder an option to take loans against the sum assured of their policies. Example – Moneyback plans, Endowment plans, ULIPs.
Life insurance schemes like Retirement plans provide a fixed regular annuity to policyholders post retirement for a predetermined number of years.
Types of Life Insurance Policy:
There are different types of life insurance policies in India offering benefits to fulfill your different family goals. Thus, it’s important to understand the differences in each life insurance policy before you get one.
Term Insurance:
Term insurance is the simplest and most basic form of life insurance schemes in India that provides life cover for a pre-specified time period. The beneficiary receives a predetermined sum insured on the death of the policy holder within policy period. These are the most widely purchased life insurance schemes in India as you can get a relatively higher sum insured at pocket friendly premium rates.
Term Insurance with benefits such as return of premium on maturity, increasing or decreasing sum assured on yearly basis, convertibility option is offered by several term life insurance companies in India. You can opt for additional riders along with a Term Insurance like Personal Accident cover, critical illness, waiver of premiums, income benefits etc to increase the total coverage of your sum insured.
Whole Life Insurance:
Whole life insurance policies are also termed as Permanent Plan as they provide a life cover for 99 years. In case, the policyholder survives up to 100 years, they would receive the matured endowment coverage as a maturity benefit. Thus, a Whole Life Insurance provides you with dual benefits of life cover and matured endowment.
You can consider buying a Participating or a Non-Participating Whole Life Insurance policy depending on your financial requirements. The premiums for a Participating policy are generally higher, but you can get the benefit of receiving regular dividends. While, the premiums are low for non-Participating policies as these policies do not offer dividend to policyholders. Although Whole Life Insurance does offer a matured endowment benefit on survival up to the age of 100 years, it is still considered to be a pure life insurance as per industry standards taking into consideration the expected human life expectancy in India.
ULIPs:
Unit Linked Insurance Plans or ULIPs offer benefits of having both insurance and investment. The premiums paid for the purchase of these life insurance schemes are divided into two: one portion is used to cover the cost of life insurance cover and the other portion is invested in equity funds, debt funds or other securities. Policyholders have the choice to select and switch amongst different funds available in these schemes.
ULIPs are very popular types of life insurance policies in India as they offer tax-savings benefits on LTCG.
Investments by Individual and HUF in ULIPs are eligible for deduction under Section 80C. Further, Section 10(10D) provides an exemption for any sum received under ULIP, including the sum allocated by bonus on such policy.
Moneyback Plans:
MoneyBack Plans are one of the best life insurance policies in India as the policyholder gets a certain percentage of their total sum insured at regular intervals as a survival benefit and the remaining sum assured would be given on maturity of the policy.
In case, the policyholder dies during the policy period, the beneficiaries of the policy would receive the entire sum insured without any deductions.
Endowment Plans:
Endowment Plans offer dual benefits of insurance and savings. These types of life insurance policies in India are best suited for individuals who want an insurance coverage along with a sizable savings component.
The policyholder receives the benefits of insurance coverage until maturity and a lump sum payment on maturity of their policy. You can consider buying an Endowment plan with or without profits depending on your financial requirements and risk appetite.
Retirement Plans:
Retirement Plans are a unique type of life insurance policies in India that provides benefits of financial stability after retirement along with a life cover. Under these plans, the policyholder would pay premiums until retirement to create a corpus. And after retirement, the corpus generated by the policyholder over the years would be distributed back to them as a regular income for a predetermined time period.
These plans also provide a life cover to the policyholder. Hence, if the policyholder dies during the policy period, the beneficiaries would receive the sum insured.
Child Insurance:
Child Insurance Plans are a unique type of life insurance policies in India. These insurance plans offer a life cover to the policyholder only for a single financial goal of ensuring financial well-being of their child.
Purchasing these policies would ensure that your child’s future needs such as education, marriage, etc are taken care of in your absence.
Group Insurance:
Group life insurance in India is usually taken by corporations for the financial well-being of their employees and clients.
You should know the coverage offered under these group insurance plans are valid only until you remain a part of the group. Hence it is recommended that you have an individual life insurance for yourself and not just depend on the insurance offered by your employer.
How to Get Best Life Insurance policy in India?
An average individual in India purchases a life insurance policy with limited information like premiums, tenure, sum assured and process to file a claim. Even among these, premiums are the most preferred point of comparison and the insurance company that offers them a life insurance at lowest premiums is usually termed “best life insurance companies in India”
We would recommend you consider the below fundamentals to evaluate the best life insurance companies in India:
Evaluate Best Life Insurance Companies in India:
Following the below checklist should guide you in choosing the best life insurance companies in India:
IRDAI regulates the Life Insurance companies in India. You should always make sure that you buy life insurance policies online only from IRDAI regulated Life Insurance companies.
Claim settlement ratio is one of the most important points of comparison. You can get the CSR figure of every life insurance company in India from the IRDAI annual reports, it denotes the percentage of claims settled by an insurance company against all claims received in a year. While evaluating the best life insurance companies in India make sure you choose those companies having a high claim settlement ratio.
Persistency Ratio provides you with the information of how much percentage of policy holders have renewed their policies with the insurance companies. IRDAI reports these numbers for all insurance companies at intervals of 13, 25, 37 and 61 months. While evaluating the best life insurance companies in India make sure you choose those companies having a high persistency ratio.
ICR indicates the financial ability of the life insurance companies to pay claims. The ICR value is calculated using the value of claims paid against the total claim settled in a year. While evaluating the best life insurance companies in India make sure you choose those companies having a high incurred claim ratio.
Solvency ratio indicates the financial stability of an insurance company as it compares all assets and inflows against the liabilities and outflows. IRDAI mandates all Insurance companies in India to have a solvency ratio greater than 150%. While evaluating the best life insurance companies in India make sure you choose those companies having a high solvency ratio.
CER indicates the expenses paid by a life insurance company towards expenses such as agent’s commission, advertisement, employee wages, etc. The CER value is calculated as a percentage of expenses made by an insurance company to the net premium collected in a year. While evaluating the best life insurance companies in India make sure you choose those companies having a low commission expense ratio.
You may view the ratings and read reviews of the customer service experience on internet for any Insurance company. It is recommended to select insurance companies having good online reviews and ratings before you buy life insurance online.
| Best Life Insurance Companies in India | |||||
|---|---|---|---|---|---|
|
COMPANY |
TOTAL POLICIES |
BENEFIT AMOUNT (CR) |
CSR (% of TOTAL POLICY) |
CSR (% of BENEFIT AMOUNT) |
SOLVENCY RATIO |
|
LIC |
933889 |
18295 |
98.62% |
95.76%
|
1.66 |
|
Aditya Birla SunLife
|
6455 |
468.85 |
98.04% |
93.15% |
1.77 |
|
Aegon |
398 |
105.98 |
99.25% |
98.64% |
2.58
|
|
Ageas Federal
|
1716
|
73.85 |
95.07% |
83.63% |
3.37 |
|
Aviva |
1034 |
111.57
|
98.01% |
95.24%
|
2.41
|
|
Bajaj Allianz
|
14115 |
410.68 |
98.48% |
91.97% |
7.16 |
|
Bharti Axa |
1875 |
106.04 |
99.05%
|
98.55% |
1.83 |
|
Canara HSBC OBC |
1844
|
156.08
|
97.10%
|
92.61%
|
3.19
|
|
Edelweiss Tokio |
487
|
45.83 |
97.01% |
87.98% |
2.2 |
|
Exide
|
4978
|
170.43
|
98.54%
|
93.28%
|
2.17
|
|
Future Generali
|
1163
|
48.11
|
94.86%
|
86.24%
|
1.72
|
|
HDFC Life
|
16639 |
1037.23 |
98.01%
|
80.06% |
1.99 |
|
ICICI Pru Life
|
14518
|
1504.64
|
97.90%
|
89.20%
|
2.13
|
|
India First
|
2886
|
109.64
|
96.81%
|
91.16%
|
1.76
|
|
Kotak Mahindra
|
4336
|
299.92
|
98.50%
|
95.47%
|
2.97
|
|
Max Life
|
19922
|
885.57
|
99.35%
|
95.42%
|
2
|
|
PNB MetLife
|
5218
|
331.7
|
98.17%
|
93.92%
|
1.96
|
|
Pramerica Life
|
638
|
28.63
|
98.61%
|
97.01%
|
4.19
|
|
Reliance Nippon
|
9274
|
205.26
|
98.91%
|
95.03%
|
2.28
|
|
Sahara Life
|
860
|
9.02
|
97.18%
|
97.47%
|
9.11
|
|
SBI Life
|
31855 |
1398.7
|
93.09%
|
86.22%
|
2.33
|
|
Shriram Life
|
3506
|
95.81
|
95.12%
|
77.48%
|
2
|
|
Star Union
|
1569
|
72.49
|
95.96%
|
92.79%
|
2.30
|
|
Tata AIA
|
4556
|
478.4
|
98.02%
|
87.57%
|
2
|
Disclaimer: The below-mentioned claim settlement ratio (CSR) and Solvency ratio has been sourced from IRDA Annual Reports and company websites. EquitySeeds Consultants does not endorse, rate or recommend any particular insurance company or insurance plan.
Evaluating Best Life Insurance Policy in India:
Since every individual has different insurance needs, it’s incorrect if we pick any one life insurance policy and term it as the best life insurance policy in India.
For individuals wanting to buy life insurance only to get a life cover, we can choose among term plans or whole life plans as that would be the best life insurance policy for them. However, if an individual wants a life cover as well as an investment plan then the best life insurance policies for them could be Endowment plans, Money Back plans, ULIPs or others.
Once the insurance need is understood and the type of life insurance policies that match these insurance needs is selected. One can compare life insurance schemes offered by different life insurance companies in India to identify the best life insurance policies for them.
While evaluating the best life insurance schemes in India for the same type of insurance, you can ask these questions:
- Is the life insurance company registered with IRDA?
- Does the life insurance company have a sound fundamental?
- What are the premiums for a certain sum assured?
- Does the company offer additional riders to increase the scope of coverage of the main policy?
- Is the policy claim process easy and fast?
- How are the returns given by the company that invests in market linked products?
- Has the insurance company been paying a regular bonus or dividend?
Conclusion:
An individual can buy multiple life insurance policies but within the Human Life Value (HLV) limit as imposed by life insurance companies in India for their varied insurance and investment needs. HLV limit is generally up to 20 times the annual take-home income of an individual. In case an application for a life insurance policy greater than the HLV limit is made, the insurer would reject it. Hence, plan your financial goals before buying insurance.
After knowing how to evaluate the best life insurance policies in India as per your insurance needs, you should be able to select a life insurance that matches your needs. However, if you need more assistance you can count on our expert advisory.
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