In this article we compare the claim settlement ratio of life insurance companies for the last four years (2010-11, 2011-12, 2012-13 and 2013-14) and the features of term plans offered by life insurance companies along with the premium charged by them for these term plans. The claim settlement ratio of the life insurance company, features of the plan and premium charged are some of the important considerations for any person who wishes to buy a term life insurance plan.
Claim Settlement Ratio (CSR): In simple terms claim settlement ratio is the number of claims settled (paid) by the life insurance company for every 100 claims received by it. For example in 2013-14 LIC paid / settled 98.14 claims out of every 100 claims received by it, then the CSR for LIC for 2013-14 will be 98.14%. The higher the CSR for a life insurance company the better.
In the below table we compare the CSR for life insurance companies for last four years (2010-11, 2011-12, 2012-13 and 2013-14) along with the premiums charged by these companies for their term insurance plans. The premiums are for a 30 year old male (non-smoker) for a cover of Rs. 1 crore for 30 years.
| Company Name | 2013-14 | 2012-13 | 2011-12 | 2010-11 | Term Plan | Premium |
| LIC | 98.14 | 97.73 | 97.42 | 97.03 | e-Term | Rs. 15,700 |
| ICICI Prudential | 94.1 | 96.29 | 96.53 | 94.61 | iProtect | Rs. 10,900 |
| HDFC Life | 94.01 | 95.76 | 96.17 | 95.41 | Click 2 Protect Plus | Rs. 9,024 |
| Max Life | 93.86 | 94.25 | 89.84 | 77.96 | Online Term Plan | Rs. 7,400 |
| Bajaj Allianz | 91.29 | 88.67 | 90.61 | 88.69 | iSecure | Rs. 11,960 |
| SBI Life | 91.06 | 94.41 | 95.48 | 82.24 | eShield | Rs. 11,690 |
| Kotak Life | 90.69 | 92.04 | 92.1 | 89.3 | Preferred e-Term Plan | Rs. 7,375 |
| Tata AIA | 89.68 | 84.46 | 83.94 | 81.93 | iRaksha Supreme | Rs. 7,400 |
| Bharti Axa | 88.13 | 89.48 | 87.7 | 87.17 | eProtect | Rs. 7,300 |
| Birla Sunlife | 87.76 | 82.55 | 90.94 | 94.66 | Protect@Ease | Rs. 8,650 |
| Canara HSBC | 86.76 | 88.44 | 80.58 | 71.02 | eSmart Term Plan | Rs. 8,740 |
| Aviva | 84.01 | 87.71 | 89.55 | 84.15 | iLife | Rs. 7,368 |
| Exide Life | 83.16 | 83.94 | 88.82 | 90.49 | ||
| Reliance Life | 81.97 | 86.45 | 84.58 | 81.36 | ||
| Aegon Religare | 81 | 66.82 | 66.06 | 52.31 | ||
| Future Generali | 74.88 | 70.53 | 68.06 | 50.52 | ||
| India First | 73.13 | 71.4 | 82.23 | 82.01 | ||
| Shriram | 67.69 | 67.35 | 64.93 | 55.69 | ||
| Edelweiss Tokio | 60 | 45.45 | 100 | NA | ||
| DLF Pramerica | 22.14 | 27.04 | 24.46 | 51.22 | ||
| Overall Industry | 96.75 |
|
Please note:
1) The above mentioned premiums are for a 30 year old male (non-smoker) for a cover of Rs. 1 crore for 30 years. The premiums are exclusive of service tax.
2) The claim settlement ratio has been taken from the IRDA Annual Report.
3) The claim settlement ratio is overall for the company for all products taken together and not just for term plans. The CSR for a specific product / plan is not available from the IRDA Annual Report.
4) All premiums amounts have been taken from the respective company websites and may be subject to changes from time-to-time.
5) These premium amounts are as on Jan 2015. Interested buyers are requested to re-check these quotes with respective insurance companies before purchasing a term plan. These rates may not be fixed and are subject to change from time-to-time.
6) Last but not the least; we are not representing any particular insurance company 🙂
Now let us look at a comparison of the features of the online term plans offered by some of these companies
| Policy Name | Policy Term | Maximum age at maturity | Minimum Sum Assured | Claim Settlement Ratio (2013-14) | Annual Premium | Cover Options |
| LIC e-Term | 10-35 years | 75 years | Rs. 25 lakhs | 98.14 | Rs. 15,700 | — |
| ICICI Prudential iProtect | 10-30 years | 75 years | 94.1 | Rs. 10,900 | a) Only death benefit b) Death benefit + Accidental death cover | |
| HDFC Life Click 2 Protect Plus | 10-40 years | 75 years | Rs. 25 lakhs | 94.01 | Rs. 9,024 | a) Life Option b) Extra Life Option c) Income Option d) Income Plus Option |
| Max Life Online Term Plan (Basic Cover) | 10-35 years | 70 years | Rs. 25 lakhs | 93.86 | Rs. 7,400 | a) Sum Assured b) Sum Assured + Level Monthly Income c) Sum Assured + Increasing Monthly Income |
| Bajaj Allianz iSecure | 10-30 years | 70 years | Rs. 20 lakhs | 91.29 | Rs. 11,960 | — |
| SBI Life eShield | 5-30 years | 70 years | Rs. 20 lakhs | 91.06 | Rs. 11,690 | a) Level cover b) Level cover with accidental death benefit c) Increasing cover d) Increasing cover with accidental death benefit |
| Kotak Preferred e-Term Plan | 10-40 years | 75 years | Rs. 25 lakhs | 90.69 | Rs. 7,375 | a) Immediate Payout b) Recurring Payout |
| Tata AIA iRaksha Supreme | 10-40 years | 80 years | Rs. 50 lakhs | 89.68 | Rs. 7,400 | — |
| Bharti AXA eProtect | 10-30 years | 75 years | Rs. 25 lakhs | 88.13 | Rs. 7,300 | — |
| Birla Sunlife Protect@Ease | 5-30 years | 80 years | Rs. 50 lakhs | 87.76 | Rs. 8,650 | a) Level term assurance b) Increasing Term assurance |
| Canara HSBC eSmart Term Plan | 5-40 years | 75 years | Rs. 25 Lakhs | 86.76 | Rs. 8,740 | a) Sum Assured b) Sum Assured + Accidental Death Benefit |
| Aviva iLife | 10-35 years | 70 years | Rs. 25 lakhs | 84.01 | Rs. 7,368 | — |
Let us now analyse each of these plans in comparison of other plans.
1) LIC e-Term
As we can see from the first table above, LIC has consistently maintained the best claim settlement ratio among all insurance companies in the last 4 years. Also LIC has kept improving its own claim settlement ratio year-after-year in the last 4 years from 97.03 (in 2010-11) to 98.14 (in 2013-14). In 2013-14, for every 100 claims that LIC received, it settled 98.14 claims. Kudos to LIC for doing that!
Now coming to e-Term, LIC’s online term plan, the Rs. 15,700 annual premium charged by LIC is also the highest among all online term plans offered by all life insurance companies in our comparison. Infact companies like Max Life, Kotak Life, Tata AIA, Bharti AXA, Aviva etc. are offering their term plans at half or less than half the cost of LIC’s e-Term. But LIC’s e-Term premium is lower than the premium for LIC’s offline term insurance plan “Amulya Jeevan”
LIC’s e-Term can be bought for a minimum tenure of 10 years and maximum tenure of 35 years. The minimum sum assured is Rs. 25 lakhs.
LIC’s e-Term does not offer any riders or any other cover options / variants apart from death benefit. So it is a simple term insurance plan that pays only in the event of death of the life insured during the tenure of the plan.
Who should buy this plan?
a) Any person who is looking for a plain term insurance plan or
b) Any person for whom the high claim settlement ratio is very important even if it comes at a higher cost as compared to premiums of other plans of other companies or
c) Any person who would prefer to buy insurance from a Government owned company may go for this plan.
According to us LIC’s e-Term plan is a good plan to have.
2) ICICI Prudential iProtect
ICICI Prudential has the second best claim settlement ratio of 94.1 even though it has gone down from last year’s CSR of 96.29. ICICI Prudential iProtect annual premium of Rs. 10,900 is significantly lower than LIC e-Term annual premium of Rs. 15,700 but higher than HDFC Click 2 Protect Plus annual premium of Rs. 9,024 or Max Life Online Term Plan annual premium of Rs. 7,400 or Kotak Life e-Preferred Term Plan annual premium of Rs. 7,375.
iProtect comes with 2 cover options:
a) Death Benefit (On death of life insured, sum assured is paid) or
b) Death Benefit + Accidental Death Benefit (On death of life insured due to accident, sum assured is paid + additional amount is paid as ‘Accidental Death Benefit’. If death of life insured is NOT due to accident, then only sum assured is paid)
The Accidental Death Benefit cover is subject to a maximum limit of Rs. 50 lacs. iProtect can be bought for a tenure of 10 – 30 years.
If we compare the cover options offered by ICICI Prudential iProtect with the cover options offered by HDFC Life Click 2 Protect Plus or Max Life Online Term Plan or Kotak Preferred e-Term Plan, the cover options offered by the latter 3 companies offer more choice to the buyer and that too at a lower price as compared to ICICI Prudential iProtect.
3) HDFC Life Click 2 Protect Plus
HDFC Life has the third best claim settlement ratio of 94.01 even though it has gone down from last year’s CSR of 95.76. HDFC Life Click 2 Protect Plus annual premium of Rs. 9,024 is lower than LIC e-Term (Rs. 15,700) and ICICI Prudential iProtect (Rs. 10,900).
Click 2 Protect Plus can be bought for tenure of 10 to 40 years. The minimum sum assured is Rs. 25 lakhs.
With regards to death benefit cover options to choose from, Click 2 Protect Plus has four death benefit cover options to choose from. We have summarised the four death benefit cover options below with an example. We have considered annual premiums (exclusive of service tax) for a 30 year old male (non-smoker) for a cover of Rs. 1 crore for 30 years.
Plan Option | Death Benefit Cover | Annual Premium and Amount that will be paid by life insurance company |
Life Option | On the death of the life insured, 100% of sum assured will be paid as lumpsum. Life Stage Protection option is also available to increase cover after marriage (50% increase in base cover) and / or child birth (25% increase in base cover). After age 45 years, the cover can be brought down to the base (original) cover. | Rs. 9,024 p.a.
In this case in the event of death of the life insured, Rs. 1 crore will be paid. |
Extra Life Option | On the death of the life insured, 100% of sum assured will be paid as lumpsum + Accidental Death Benefit will be paid as lumpsum | Rs. 14,018 p.a.
In this case in the event of death of life insured due to accident Rs. 2 crore (Rs. 1 crore base sum assured + Rs. 1 crore accidental death benefit) will be paid. |
Income Option | On the death of the life insured, 10% of sum assured will be paid as lumpsum + Remaining 90% sum assured will be paid in the form of monthly income (0.5% of sum assured) over a period of 15 years | Rs. 7,580 p.a.
In this case Rs. 10 lakhs will be paid on death and remaining Rs. 90 lakhs will be paid as equal monthly installments of Rs. 50,000 for a period of 15 years |
Income Plus Option | 100% of sum assured will be paid as lumpsum + Additional monthly income equal to 0.5% of Sum Assured will be paid for a period of 10 years. The monthly income can be level or increasing @ 10% p.a. as chosen by the policyholder at the time of buying the policy | Rs. 12,183 p.a. (for equal monthly income payout) Rs. 13,536 p.a. (for 10% annually increasing monthly income payout) In this case Rs. 1 crore will be paid on death and an additional Rs. 50,000 per month will be paid for the next 10 years. |
The plan cover option has to be chosen at inception of the policy and once chosen can’t be changed during the tenure of the policy.
So we can see above, Click 2 Protect Plus plan offers various death benefit cover options to choose from depending on what the life insured is looking for.
Considering the competitive annual premium (Rs. 9,024), third best claim settlement ratio (94.01) and the range of death benefit cover options offered, we believe Click 2 Protect Plus plan is good plan to have.
Who should buy this plan?
a) Any person who is looking for a plain term insurance plan or looking to increase cover at important life stages like marriage, child birth or
b) Any person who is looking for a plan that offers additional cover on death due to accident or
c) Any person who is looking for a plan that pays a certain amount (10%) of sum assured on death to family and remaining amount (90%) of sum assured in the form of monthly installments for 15 years
d) Any person who is looking for a plan that pays 100% of the sum assured (as lumpsum) on death to the family members and an additional monthly income (0.5% of sum assured) to family for 10 years may go for this plan
Click here to read our detailed article about HDFC Life Click 2 Protect Plus.
Max Life Insurance has the fourth best claim settlement ratio of 93.86. Max Life Online Term Plan annual premium of Rs. 7,400 is lower than LIC e-Term (Rs. 15,700), ICICI Prudential iProtect (Rs. 10,900) and HDFC Life Click 2 Protect Plus (Rs. 9,024). The plan comes at less than half the cost of LIC’s e-Term plan. Infact it is the cheapest plan in terms of annual premium among the four plans discussed so far.
The Online Term Plan can be bought for tenure of 10 – 35 years.
With regards to death benefit cover options to choose from, Online Term Plan Plus offers three death benefit cover options to choose from. We have summarised the three death benefit cover options below with an example. We have considered annual premiums (exclusive of service tax) for a 30 year old male (non-smoker) for a cover of Rs. 1 crore for 30 years.
Cover Option | Annual Premium | Death Benefit |
| Max Life Online Term Plan – Basic Life Cover | Rs. 7,400 | Rs. 1 crore will be paid on death of the life insured |
| Max Life Online Term Plan – Life Cover + Monthly Income | Rs. 10,100 | Rs. 1 crore will be paid on death of life insured + Rs. 40,000 (0.4% of sum assured) per month will be paid for 10 years |
| Max Life Online Term Plan – Life Cover + Increasing Monthly Income | Rs. 11,100 | Rs. 1 crore will be paid on death of life insured + Rs. 40,000 per month (annually increasing @ 10% simple interest p.a.) will be paid for 10 years |
So we can see above, Online Term Plan offers various death benefit cover options to choose from depending on what the life insured is looking for.
Considering the low annual premium (Rs. 7,400), fourth best claim settlement ratio (93.86) and the range of death benefit cover options offered, we believe Online Term Plan is good plan to have.
Looking at the features of Max Life Online Term Plan and HDFC Life Click 2 Protect Plus, for a person wanting to buy a term plan, it is a close call between Max Life Online Term Plan and HDFC Life Click 2 Protect Plus plan. While both plans offer somewhat similar cover options, HDFC Life has a slightly better claim settlement ratio than Max Life, whereas Max Life Online Term Plan comes at a lower annual premium than HDFC Life Click 2 Protect Plan.
Who should buy this plan?
a) Any person who is looking for a plain term insurance plan or
b) Any person who is looking for a plan that pays 100% of the sum assured on death to the family and an additional monthly income (0.4% of sum assured) to family for 10 years
c) Any person who is looking for a plan that pays 100% of the sum assured on death to the family and an additional monthly income (0.4% of sum assured) annually increasing @ 10% (simple interest p.a.) to family for 10 years
Click here to read our detailed article about Max Life Online Term Plan
5) SBI Life eShield
SBI Life ranks sixth in terms of claim settlement ratio at 91.06. SBI Life eShield comes for an annual premium of Rs. 11,690 which is lower than LIC e-Term (Rs. 15,700) but higher than ICICI Prudential iProtect (Rs. 10,900), HDFC Life Click 2 Protect Plus (Rs. 9,024) and Max Life Online Term Plan (Rs. 7,400).
SBI Life eShield can be bought for tenure of 5 – 30 years.
With regards to death benefit cover options to choose from, eShield has four death benefit cover options to choose from. We have summarised the four death benefit cover options below with an example. We have considered annual premiums (exclusive of service tax) for a 30 year old male (non-smoker) for a cover of Rs. 1 crore for 30 years.
Cover Option | Explanation | Annual Premium |
Level Cover | On the death of the life insured Rs. 1 crore will be paid to the family | Rs. 11,690 |
Level Cover with ADB | On the death of the life insured Rs. 1 crore will be paid to the family + Additional Rs. 50 lakhs will be paid if death happens due to accident If death does not happen due to accident, then only Rs. 1 crore will be paid | Rs. 13,590 |
Increasing Cover | Increase in Basic Sum Assured by 10% (at simple rate) at the end of every 5th Policy Year without any increase in Premium. If death happens during the first 5 years then Rs. 1 crore will be paid If death happens between 6th and 10th year, then Rs. 1.1 crore will be paid Similarly cover will go on increasing @ 10% simple rate every 5 years | Rs. 14,770 |
Increasing Cover with ADB | Along with Increase in Basic Sum Assured by 10% (at simple rate) at the end of every 5th Policy Year without any increase in premium, you get an additional coverage against death due to accident during the policy term. If death happens due to accident during first 5 years then Rs. 1.5 crore will be paid. If death is NOT due to accident then only Rs. 1 crore will be paid. If death happens due to accident between 6th and 10th year, then Rs. 1.6 crore will be paid. If death is NOT due to accident then only Rs. 1.1 crore will be paid. Similarly cover will go on increasing @ 10% simple rate every 5 years | Rs. 16,671 |
So we can see above, eShield Plan offers various death benefit cover options to choose from depending on what the life insured is looking for.
The Level Cover option and the Level Cover with ADB option are similar to HDFC Life Click 2 Protect Plus options i.e. Life Option and Extra Life Option. While SBI Life eShield Level Cover Option comes at an annual premium of Rs. 11,690; the HDFC Life Click 2 Protect Plus Life Cover Option comes at a lower annual premium of Rs. 9,024. Also HDFC Life has a better claim settlement ratio of 94.01 as compared to SBI Life’s claim settlement ratio of 91.06. So HDFC Life Click 2 Protect Plus emerges as a better option as compared to SBI Life eShield.
6) Kotak ePreferred Term Plan
The claim settlement ratio for Kotak is 90.69 for 2013-14. Kotak ePreferred Term Plan comes for an annual premium of Rs. 7,375 which is lower than LIC e-Term (Rs. 15,700), ICICI Prudential iProtect (Rs. 10,900), HDFC Life Click 2 Protect Plus (Rs. 9,024) and Max Life Online Term Plan (Rs. 7,400). In terms of annual premium, Kotak ePreferred Term Plan is the cheapest term plan among all term plans discussed so far.
Kotak ePreferred Term Plan can be bought for tenure of 10 – 40 years.
With regards to death benefit cover options to choose from, ePreferred Term Plan has two death benefit cover options to choose from. We have summarised the two death benefit cover options below with an example. We have considered annual premiums (exclusive of service tax) for a 30 year old male (non-smoker) for a cover of Rs. 1 crore for 30 years.
Cover Option | Explanation | Annual Premium |
Immediate Payout | On the death of the life insured Rs. 1 crore will be paid to the family | Rs. 7,375 |
Recurring Payout | On the death of the life insured 10% of sum assured (in this case Rs. 10 lakhs) will be paid to the family + Additional Rs. 6 lakhs will be paid annually or Rs. 49,320 will be paid monthly for the next 15 years | Rs. 6,300 |
The above features of Kotak ePreferred Term Plan are somewhat similar to HDFC Life Click 2 Protect Plus plan and Max Life Online Term Plan. The premium for Kotak ePreferred Term Plan (Rs. 7,375) is lower than HDFC Life Click 2 Protect Plus (9,024) and almost at par with Max Life Online Term Plan (Rs. 7,400). The claim settlement ratio of HDFC Life (94.01) and Max Life (93.86) is better than that of Kotak (90.69). Based on the need, the consumer may choose between the three plans.
Overall conclusion
Comparing all the above six term insurance plans we come to the following conclusion
a) An individual for whom the claim settlement ratio matters the most (even if it comes at a higher premium), the ultimate choice to go for is LIC e-Term
b) Most individuals look for a combination of higher claim settlement ratio & low premium and range of cover options to choose from. For such individuals HDFC Life Click 2 Protect Plus and Max Life Online Term Plan are good options to look at.
The above conclusion does not mean other plans should be ignored. An individual should consider his / her need and accordingly choose the term plan that perfectly fits the need.
And finally we sincerely hope your search for a term plan and the dilemma of striking a fine balance between high claim settlement ratio and lower premium gets resolved to a certain extent with this article. We would love to hear from you on this or any other query!!!
Click here to read our detailed article about HDFC Life Click 2 Protect Plus.
Click here to read our detailed article about Max Life Online Term Plan
If you like our articles and would like to receive regular articles in your inbox, then you can join our mailing list by quickly filling the below form.
You can share your comments in the below mentioned comment box or write to us at [email protected].