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How to Select the Right Insurance Company for Term Insurance?

24-June-2021 |

All of us value and crave security: the security of our families, cars, bikes, homes, and bank accounts, to name a few. Since we try to ensure that everything we love is safeguarded against the uncertainties of future, why should our life, perhaps the most uncertain variable of them all, be an exception? Therefore, purchasing a term life insurance policy is a prudent financial decision and one you should not procrastinate.

Term insurance is a financial product that offers you a life cover in exchange for a premium payment. Often called the purest form of life insurance, a term plan is an easy and safe way to safeguard the financial future of your family against any eventualities. However, with a multitude of options at your disposal and numerous term plans in India, it may be challenging to select the most suitable term life insurance policy for yourself.

 

Here Is How You Can Assess Life Insurance Companies

With a sufficient degree of clarity and research, you can select a term plan in alignment with your insurance requirements and financial goals. One of the most difficult aspects of selecting a term insurance plan is choosing a life insurance company. Let us understand how you can select the right insurance company to purchase term insurance with the help of an example.

Ms Aarija, aged 25, had recently started working at a multinational company when during a dinner with her friends, the conversation turned to life insurance plans. With all the talk about life insurance companies, insurance company ratings, and online term insurance, Aarija found herself wondering whether she had waited too long in life to purchase her first term life insurance policy.

Upon returning home, Aarija embarked on a mission - the mission to research all things about term insurance, including the right age to buy it, the insurance companies with the highest ratings and claim settlement ratios, the modes and frequency of premium payments, term insurance add-ons, etc. After scouring the Internet and having made ten pages worth of notes, Aarija arrived at the conclusion that the selection of a life insurance company was perhaps as important, if not more, as the choice of the adequate term plan for herself.

Whilst assessing the leading life insurance companies in India, Aarija took into account the following factors. 

 

  1. High Claim Settlement Ratio

    Having learnt that the claim settlement ratio of a life insurance company is one of the highest barometers of its credibility and value from a policyholder's perspective, Aarija looked up the claim settlement ratios of the leading life insurance companies in India for the preceding five financial years and noted them down for assessment and comparison.

    Since this ratio reflects the number of claims settled by a life insurance company with respect to the number of claims received by it in a financial year, it indicates a particular insurance provider's approach to the claims process and their commitment to the timely and efficient settlement of life insurance claims.

  2. Low Policy Lapse Ratio

    The second factor that drew Aarija's attention was the policy lapse ratio of different life insurance companies in India. A policy lapse ratio is the ratio of the number of policies terminated by an insurance company owing to the non-payment of premiums to the total number of policies in their books.

    If the policy lapse ratio of an insurer is high, it represents a high rate of lapse of policies which is not a favourable marker from the point of view of a policyholder. Therefore, Aarija surmised that lower the policy lapse ratio, higher the reliability of a particular insurer. After researching the policy lapse ratios of various companies selling term plans in India, Aarija listed them in the order of lowest to highest.

  3. High Early Claims Settlement Ratio

    There may be times when a life insurance claim is filed in the early stages of a term plan, that is, within the first three years. In such a scenario, the claim is termed as an early claim. Aarija's research revealed that early claims had a shorter stipulated settlement timeline as compared with their non-early counterparts, that is, claims filed after the expiration of the first three years of the policy tenure.

    Hence life insurance companies with a high early claims settlement ratio can be considered highly dedicated to the cause of serving their customers and settling claims early. Aarija found this information really valuable since the uncertainty of life meant that anyone could be required to file an early life insurance claim.

  4. Satisfied Customers

    During her mission to select an adequate life insurance company, Aarija discovered that the most significant marker of the credibility of said company is, inarguably, the level of customer satisfaction it has attained. If a high percentage of the policyholders of a life insurance company is satisfied with its services, it is usually a sign that that insurer is a good choice to buy a term plan from.

    As difficult as it is to measure something as subjective as customer satisfaction levels, customer reviews paint a fairly clear picture of their feedback on their life insurance provider's service delivery. Whilst perusing the websites of various life insurance companies in India, Aarija made a note of the customer reviews listed thereon. Furthermore, she also asked her friends and coworkers about their assessment of their life insurance providers to approach the subject from a wider angle.

  5. Commitment to Quality Service Delivery

    Being a part of the service industry herself, Aarija knew the importance of quality service delivery and the extent to which it represents a company’s commitment towards its customers. It is easy to make big promises with regards to service quality, but actions speak louder than words, and there is no greater testament to a life insurance company's commitment to quality service delivery than the promptness with which they respond to customer queries and the dedication with which they approach customer grievances.

    Since this variable is difficult to measure, Aarija took it upon herself to call the customer care numbers of some of the leading life insurance companies of India to make enquiries about their term insurance plans. She took note of the way her queries were addressed and the commitment displayed by the support teams of each of the companies being assessed.

    After assessing and ranking different life insurance companies in India upon these parameters, Aarija was able to make an informed decision about the life insurance company to choose for her term life insurance policy. She went ahead and selected a suitable term plan for herself and opted for online term insurance to save on time and effort in the policy purchase.

 

Therefore, if you invest some time, you can determine the right insurance company and term plan for yourself. At Tata AIA, customer satisfaction is the core of our product and service strategy. With a commitment to safeguarding our policyholders through the 'Rakshakaran Ki Reet', we offer a wide selection of term life insurance policies that you can buy online. You can purchase a Tata AIA Life Insurance term policy at our website.

 

Conclusion

It is difficult but not impossible to find the right insurance provider and a suitable term plan for yourself. All you need is a little bit of interest, dedication, and time, to select a term life insurance policy that provides sufficient coverage to you at a feasible premium.

Just like Aarija, you can also make an informed decision about term insurance. Remember the importance of security and certainty, and choose well!

L&C/Advt/2021/Dec/2132

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer
  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • * Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you