How to choose term plan?

Every one wants to buy the best term insurance but on which factors one must decide which term plan is best. Some ads in TV says, did you compare the premium of the term plans or some people says that IRDA has permitted life insurance companies so definitely all term plans will be good, so which one should really take?

1. Death Claim ratio: One should buy the not only term plan but any kind of life insurance from the company which has the best claim ratio. (What is death claim ratio? It is the number of policies, whose claims are settled out of every 100).What is the benefit of taking term insurance from a company whose claim ratio is less than 95%, It means your family is still not sure whether they will get claim or not so it is always better not to take insurance than buying term insurance from a company whose claim ratio is less than 95%.

LIC OF INDIA has the highest claim ratio 97% so in case death claim ratio is the criteria then LIC OF INDIA must be your first choice. Please find the figures attached at the bottom of this article.

lic term plan

2. Term Insurance period: Normally one should have adequate life insurance till the time he is not free from his responsibilities like kid’s education, kid’s marriage, spouse pension etc. Any term plan which provides cover less than 65 or 70yrs of age, I really don’t think will be beneficially and if one get term insurance which covers you till 80yrs of age that will be awesome. (what is the use of taking a term plan which ends before you fulfill your responsibilities?)

LIC OF INDIA provides term insurance coverage till 70yrs of age and if it is mixed with one of its best plan it will cover you till whole life.

3. Premium: All life insurance companies are here to earn not to distribute money in crores for the claims. There is rule for term insurance i.e. higher the term, higher the premium for the term plan will be. (Did you ever check the term of the life insurers who are offering term insurance at a very lesser premium?) 

Premium is bit higher in LIC but its plans are unmatchable. Contact us  to get the best term plan of the life insurance industry. Get maturity equal to the insurance cover in the same premium.

4. Claim settlement procedure: You are smart & intelligent as you are comparing which term insurance to take and which not but are your dependents equally smart for taking claim? Try to find out how the claims are settled in a life insurance company? People are buying term insurance online but do they ever enquire from which branch has been assigned to them or to which branch their nominee should contact in case of death of the policyholder? What documents are required during the settlement of claims, whether the nominee be able to produce those at that time?

Click here to know how claims are settled in LIC?

lic term plan

5. Exclusions: Most of the life insurance companies are in collaboration and they are here to earn not to do the charity by the way of settling claims, these companies always have hidden clauses or exclusions, which prevent their profit to come down. Natural calamity like Tsunami or earth quake, war, suicide, death occurred in bomb blast or terrorists activities etc are some of those. Do you consider these points while buying term insurance? In Delhi every fortnight there is mock drill going on, what if you die in earth quake? BUT this is not the case with LIC OF INDIA. Please see the attachment how LIC OF INDIA relaxed the claim settlement procedure in Bomb Blast in 2008.

Mumbai attack relaxsation-1

LIC to relax norms for claim settlements of Tsunami affected in 2004 Click here to read more……

6. Reputation of the company – there is no definition or cannot be easily explained as it depends on 2 factors working style/financial health of the company & your past experience. So it is very subjective & changes with the time but still will be considered to increase your confidence.

No doubt LIC OF INDIA has life fund of Rs 12,00,00,00,00,00,000 (12lakh crores)

If you still feel that premium of LIC TERM PLAN is higher but it is reliable then the best option will be, divide the life insurance cover into 2 parts which you are planning to take and buy 1 part from wherever you want and the other from LIC OF INDIA because LIC says ” JINDAGI KE SAATH BHI, JINDAGI KE BAAD BHI”

death claim ration for the year 2011-12