Compare Online Term Insurance Plans India on 8 parameters
This article is for those who are looking to compare online term insurance India, and have already decided their needs. If you aren’t clear what your protection needs are, we suggest you go through this note first. If you are sure about the type of insurance you need, you are all set to go to the next step – pick up the product and choose the company. Here’re some quick tips on how to do that.
There are various parameters you can compare and buy online term insurance India. We’ve carefully picked up the ones that matter most. These are based on information published by the Insurance Regulator IRDA till 2014-2015, which is the latest available at this time. (Note : we keep refreshing the article with the latest data when available each year)
Parameters to Compare Online Term Insurance Plans in India
1. Price : Cheaper it is, better, obviously. But this is not the only factor.
2. Claims Settlement Ratio : This is also called Claims Acceptance Ratio. This is nothing but the % of claims paid to the nominee out of the total claims received by them. Read more about it here. Higher is the claims settlement ratio, better is our confidence level that the claim will indeed be paid out by that company. When you compare online term insurance India, this is indeed a very important parameter. But beware – claims ratio is not always fully reliable.
3. Average Time to Settle a Claim : The company’s approach to claims is demonstrated amply in this parameter. Faster the speed of claims servicing, greater is our confidence that our family members will not have to go through pain (in addition to the emotional loss) for getting the insurance amount that is due to them. (In the single view table below, it has been derived using mean values of published intervals. For > 1 yr, mean value is taken as 366.)
4. Solvency Ratio : This is a little complicated. But to explain in simple words, it is the (financial) ability of the insurance company to settle all its liabilities (which include Claims from all term insurance plans) in case there is a situation of insolvency (bankruptcy) because of a sudden unforeseen event. IRDA stipulates that the Actual Solvency Margin should be 150% of the Required (calculated) Solvency Margin, i.e. 50% higher as a buffer. Solvency Ratio (Actual divided by Required) should be > 1.5, and is published by the IRDA every year. Higher it is, the better*, since it can ensure that our term insurance India claim is paid out even if there is a large event e.g. an earthquake in a metro city that kills lakhs of people (God forbid).
* From a financial analytics perspective, very high Solvency Ratio is not good since it shows there is too much idle money in the company’s books.
5. Financial Strength : Bigger is better. It’s that simple. Companies with larger customer funds (total premiums collected both from first-time buyers as well as renewals from old policies) have the muscle to manage contingencies better. Profit-making companies provide more confidence than loss-making ones. Having said that, all insurance companies take at least 7-8 years to start making profits, so the older companies have an advantage compared to younger ones.
IRDA, the insurance regulator ensures that minimum standards of performance and prudence are met by each insurance company. So there isn’t much to worry even if there are big variances between the numbers of various companies.