Term Insurance -Too much analysis has led to paralysis

Atiker

Active member
#1
Too much analysis has led to paralysis.
This year's financial resolution is to first buy enough term insurance.

I have been delaying taking term plan of appropriate amount for each earning member of my family. All have some term plans though expensive ones from LIC, which though substantial are not enough. I don't think LIC will ever come up with a cheap online term insurance plan. If it comes there always is an option to buy it then.

There are a few criteria -
1. Multiple for single person - Buy not from one but two insurers. I know, I know buying big ticket from a single one is more cost efficient but I would like to have a peace of mind by spending a few thousands more. Also in future if required one can easily discontinue and thus reduce insurance.

2. Claim Rejection Ratio
Following links are useful -
Life Insurance Company Ratings 2013
Claim Settlement Ratio for Buying Term Insurance in India - MintWise
Claim ratio for term insurance - 2012


Options shortlisted till now are
HDFC - A bit expensive then others, but then claims ratio is near LIC
ICICI - Though claims ratio is near LIC but the cleared within 30 days is not.
Aegon - Though cheap, claims ratio is also cheap, adv is insurance till 75, at least kids will enjoy the money whatever it is worth at that time after inflation.
Bharti - Not so much volume
Aviva - Again not so much volume.

If you have bought insurance from a private insurer please share your reason to select that particular insurer.

I will buy at least one policy for one member by this weekend, too much analysis has led to paralysis. Even if I make a bad choice I can discontinue next year and buy a new one.

Current feel is to buy
one 25/50 Lacs from HDFC and another 25/50 Lacs from Aegon.
 
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#2
Aegon - Though cheap, claims ratio is also cheap, adv is insurance till 75, at least kids will enjoy the money whatever it is worth at that time after inflation.
Did you get a quote from them? If someone is insuring till age 75, then the premium has to be pretty high, I would think.
 

Atiker

Active member
#4
Did you get a quote from them? If someone is insuring till age 75, then the premium has to be pretty high, I would think.
Quotes are abailable online on their website. For 30 yr old person Rates of aegon policy till age 75 are similar to those as of policy from aviva for policy term 30 yrs.
 
#6
Quotes are abailable online on their website. For 30 yr old person Rates of aegon policy till age 75 are similar to those as of policy from aviva for policy term 30 yrs.
5 reasons why you should not take Term insurance till 75 yrs !

I am not sure if I fully agree with the article. I agree with parts of it though - especially the fact that you do not require insurance beyond your working years.

Also, I think 30 year old will not get insurance upto 75 because their max term is 40 years.
 

Atiker

Active member
#7
5 reasons why you should not take Term insurance till 75 yrs !

I am not sure if I fully agree with the article. I agree with parts of it though - especially the fact that you do not require insurance beyond your working years.

Also, I think 30 year old will not get insurance upto 75 because their max term is 40 years.
Yes I agree with you that one does not require insurance beyond one's working years. I consider baby sitting grand kids is also work and should be adequately insured :)

Aegon religare is available till 75 yrs of age, more than 40yrs term. For aegon religare difference between 30 yr term policy and till 75 yrs age is a miniscule 200-300 odd Rs more.
 
#8
Yes I agree with you that one does not require insurance beyond one's working years. I consider baby sitting grand kids is also work and should be adequately insured :)
The reason for not insuring non-working people is not just because they are non-working.

A working person should insure themselves not just because they are working but only if someone is financially dependent on their income from working. If you are working but no one is dependent on your income other than you, then you shouldn't insure yourself. For eg. if you are working & wife is working & and your kids are working and all earn enough to take of themselves in the event of your death, then you need not insure yourself.

Since nobody can be dependent on a non-working person's income, a non working person should never be insured.


Aegon religare is available till 75 yrs of age, more than 40yrs term.
Nope - from their site "Maximum - 40 years or upto age 75".

For aegon religare difference between 30 yr term policy and till 75 yrs age is a miniscule 200-300 odd Rs more.
Don't try to win against insurance companies. When you are insuring your life, the insurance company profits if you live long & you profit if you die quick. So either way, you lose. So insure to prevent against financial disasters and not to make money out of it. If your death will not cause a major financial upheaval for anyone, then do not insure your life - invest the same premium instead in an investment product (which is not hooked up to insurance).
 
#9
The reason for not insuring non-working people is not just because they are non-working.

A working person should insure themselves not just because they are working but only if someone is financially dependent on their income from working. If you are working but no one is dependent on your income other than you, then you shouldn't insure yourself. For eg. if you are working & wife is working & and your kids are working and all earn enough to take of themselves in the event of your death, then you need not insure yourself.

Since nobody can be dependent on a non-working person's income, a non working person should never be insured.
Does it explicitly state anywhere that insurance exists primarily to replace the income of a person?

A non-working person does not earn income. Yet, as a caregiver to elders in the family and caretaker of kids, the contribution is immense. In the absence of the individual, fining a replacement for his / her services does require lots of money and hence insurance.
 
#10
Does it explicitly state anywhere that insurance exists primarily to replace the income of a person?
Yes, it states so both in the constitution and the insurance textbook :)

A non-working person does not earn income. Yet, as a caregiver to elders in the family and caretaker of kids, the contribution is immense. In the absence of the individual, fining a replacement for his / her services does require lots of money and hence insurance.
If this person was a family member, then I would imagine that a fair amount of money would be spent on/by the person - food, clothes, jewellery, entertainment, medical expenses, vacations etc. Wouldn't this cost as much as or more than hiring paid help for doing the same work or do you have different figures?
 
#11
Yes, it states so both in the constitution and the insurance textbook :)



If this person was a family member, then I would imagine that a fair amount of money would be spent on/by the person - food, clothes, jewellery, entertainment, medical expenses, vacations etc. Wouldn't this cost as much as or more than hiring paid help for doing the same work or do you have different figures?
The calculations on this can be subjective. I'd think it's a lot more expensive to replace such a person's services with an equally reliable and trust-worthy hire. If a disabled elderly member had to be placed in a home for Seniors that takes good care of them, that's a lot expensive than that non-working individual's expenses put together, I'd think.
 
#12
The calculations on this can be subjective. I'd think it's a lot more expensive to replace such a person's services with an equally reliable and trust-worthy hire.
How about running some sample numbers? I find it very difficult to believe that a maid costs more than a family member. I need to find better family members, I guess? The existing ones seem to be rather expensive. Especially, my spouse.

If a disabled elderly member had to be placed in a home for Seniors that takes good care of them, that's a lot expensive than that non-working individual's expenses put together, I'd think.
I am confused - whose life insurance are you referring to here? Is it the disabled elderly member or someone else?
 
#13
How about running some sample numbers? I find it very difficult to believe that a maid costs more than a family member.
Hiring *a* maid isn't expensive. But hiring one that you can trust to be by your loved one at all times, without running the risk of abusing them when you're not around, giving you the peace of mind that when you come back after work, you'll find them all in one piece is expensive.



I am confused - whose life insurance are you referring to here? Is it the disabled elderly member or someone else?
We're still talking about the need to have life insurance cover for a non-working adult because the contributions they make by way of caring for the people in the household is very hard to replace.
 
#14
Have lil more patience .. this year LIC will be launching term plan and the premium is surely going to be less, as they need to use the new mortality chart for deciding the premium for Life Insurance do not trust private.

Insurance is a business, depending on the profit targets of a company the claim ratios might change anytime for private players .. they might be very bad for a particular year.. and your loved ones might be caught in that year .. who knows...
 
#15
Insurance is a business, depending on the profit targets of a company the claim ratios might change anytime for private players .. they might be very bad for a particular year.. and your loved ones might be caught in that year .. who knows...
They cannot refuse a claim just because the claim will put their claim ratio over the their target claim ratio for a year.
 
#16
Is Aviva Life Insurance looking for a buyer?? what happens to the interest of policy holders? How does claim ratio changes in such cases?

Private insurance means lot of un-necessary questions and risks to consider :).
 
#17
New LIC Terms plans launched today with lower premiums.

LIC's Anmol Jeevan - II Plan (UIN:512N285V01 ) - PLan 822
LIC's Amulya Jeevan - II Plan (UIN:512N286V01) - Plan 823
 

Atiker

Active member
#20
For example for the aged 30 years and SA Rs.1,00,00,000 and term 25 years was previously cost us Rs.29,200 yearly. But now it is costing us Rs.22,028 (claiming to be inclusive of tax).
This still is double of private insurers. :(
 
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