Postal Life Insurance vs LIC India

Which one to buy and why?

The Life Insurance Corporation of India (LIC) is a leading life insurance provider which enjoys the immense trust of its customers. It is owned by the Government of India and it offers a range of life insurance plans for its customers. Another Government-owned entity offering life insurance policies is the Post Office. The Post Office offers a range of life insurance plans under the category Postal Life Insurance (PLI). With both LIC and PLI offering a range of life insurance policies, many of you might be confused in choosing the best insurer for your life insurance needs.

So, here is a comparative analysis of life insurance plans offered by PLI and LIC for your knowledge –

Life Insurance Plans offered by LIC:

LIC offers the following types of life insurance plans –

Types of plans Plan names
Term insurance LIC’s Jeevan Amar

LIC’s Anmol Jeevan II

Whole life insurance LIC’s Jeevan Umang
Endowment insurance LIC’s Jeevan Pragati

LIC’s Jeevan Labh

LIC’s Single Premium Endowment Plan

LIC’s New Endowment Plan

LIC’s New Jeevan Anand

LIC’s Jeevan Rakshak

LIC’s Limited Premium Endowment Plan

LIC’s Jeevan Lakshya

LIC’s Aadhar Shila

LIC’s Aadhar Stambh

Money-back insurance LIC’s Bima Shree

LIC’s Jeevan Shiromani

LIC’s New Money Back Plan – 20 years

LIC’s New Money Back Plan – 25 years

LIC’s New Bima Bachat

LIC’s New Children’s Money Back Plan

LIC’s Jeevan Tarun

Unit Linked insurance LIC’s New Endowment Plus
Pension plans Pradhan Mantri Vaya Vandana Yojana

LIC’s New Jeevan Nidhi

List of Plans offered by the Postal Life Insurance:

PLI, on the other hand, offers the following types of plans –

Types of plans Plan names
Whole life insurance Suraksha

Suvidha (convertible whole life plan)

Endowment insurance Santosh
Money-back insurance Sumangal
Child insurance Bal Jeevan Bima
Joint life insurance Yugal Suraksha

Top #9 Differences between the plans offered by Postal Life Insurance and LIC of India:

Now that you know the plans offered by both, here is a comparative analysis between PLI and LIC and the plans that they offer –

  1. Types of policies offered:
PLI PLI offers only traditional life insurance plans which promise guaranteed benefits. Market-linked plans are not available. Moreover, PLI does not offer term insurance or retirement-oriented plans which are also essential in an individual’s financial portfolio.
LIC LIC offers all types of life insurance plans, both traditional and market-linked.
  1. Health insurance coverage:
PLI There is no plan offered by PLI which covers medical costs incurred by an individual in a medical emergency.
LIC LIC offers two specialised health insurance policies – LIC’s Jeevan Arogya and LIC’s Cancer Cover. Both these plans cover major illnesses and provide the policyholder with financial assistance if the covered illnesses strike.
  1. Option to enhance the coverage:
PLI The coverage under the plans offered by PLI cannot be customised or enhanced for your wider coverage needs.
LIC LIC offers a range of optional riders which help you in enhancing and customising the coverage of your life insurance policy. The riders offered by LIC include the following –

  • LIC’s Linked Accidental Death Benefit Rider
  • LIC’s Accidental Death and Disability Benefit Rider
  • LIC’s Accidental Benefit Rider
  • LIC’s New Critical Illness Benefit Rider
  • LIC’s New Term Assurance Rider
  1. Available coverage limit:
PLI Plans offered by PLI limit the maximum available sum assured to INR 50 lakhs
LIC Under many LIC plans, there is no limit to the maximum sum assured. You can choose any level of sum assured that you want as per your coverage requirements.
  1. Eligibility to buy the plan:
PLI PLI policies are available only to individuals employed in Government organisations, defence, local bodies, educational institutions, financial institutions, listed companies, professionals, etc.
LIC LIC policies are open to all. Any Indian citizen and even NRIs can buy life insurance plans from LIC.
  1. Buying the policy:
PLI PLI policies can be bought only from the post office.
LIC LIC policies can be bought by agents, by visiting the company and also online. In fact, buying online is the easiest way to invest in a LIC policy.
  1. Premiums:
PLI Premiums of PLI plans are very low and affordable.
LIC In terms of premiums, LIC has a higher rate of a premium compared to PLI.
  1. Bonus:
PLI Many PLI plans offer a bonus which is quite high.
LIC Many LIC plans also offer bonus. However, the bonus rate is low compared to PLI plans.
  1. Maximum age:
PLI PLI policies cover individuals only up to 55 years.
LIC LIC plans have a higher coverage age limit. Coverage is allowed even up to 75 years.

Which is better – LIC or PIL?

The question of which option is better entirely rests on your requirements. If you are looking to invest in a traditional endowment plan, PLI is a better alternative as it offers the plan at a very low premium rate. Moreover, endowment plans offered by PLI earn higher bonus rates compared to the plans offered by LIC. So, for traditional endowment plans, PLI is a good choice if you are satisfied with the coverage of up to INR 50 lakhs.

If, on the other hand, you are looking to invest in ULIPs or term insurance plans, LIC is the only solution as these plans are not offered by PLI. Given the fact that a term insurance policy is a must, you should choose LIC for buying a suitable term insurance plan. Moreover, if you want to plan for your retirement or need a health insurance plan, you have to choose LIC since PLI does not offer these plans. Lastly, LIC scores over PLI in terms of its coverage level. If a higher coverage level is on your mind you should go with LIC as PLI limits the coverage available under its plans.

So, assess your insurance needs and make a choice. Both options allow you different types of life insurance plans and the choice of the better option depends entirely on what you require.

FAQs:

  1. Can a loan be taken in a PLI policy?

Yes, PLI plans allow the facility of loans. Loans are available if the policy has run for a minimum period of 3 years and has acquired a minimum surrender value of INR 1000.

  1. Are there tax benefits in LIC and PIL policies?

Yes, both LIC and PLI policies allow tax benefits. The premiums paid are allowed as a deduction under Section 80C up to INR 1.5 lakhs. The benefits received from the policy are also tax-free in your hands under Section 10 (10D).

  1. Can I buy insurance policies from both LIC and PLI?

Yes, you can buy multiple insurance policies from both LIC and PLI.

  1. How to buy LIC policy online?

You can buy LIC policies online through Turtlemint. Turtlemint is an online aggregator which lets you compare life insurance policies of multiple companies and select the best plan. You can visit Turtlemint at www.turtlemint.com and select the type of policy that you want to buy. You can then compare the available plans and buy the best policy for your requirements.

Know About Group Life Insurance in India

Understand their benefits and details

Life insurance companies not only offer insurance solutions for individuals but also for groups. Group life insurance plans are offered by almost all life insurance companies. Group insurance plans cover a group of individuals under a single plan. Let’s understand the concept of group life insurance in details –

What is group life insurance?

Group life insurance is an insurance policy on the life of the members of recognized groups. A single policy is issued which covers all the members who are a part of the group which is being insured. Usually, term insurance plans are offered as group life insurance plans and so group insurance plans are also called group term plans.

Salient features of group life insurance plans

Group life insurance plans have the following unique features –

A single policy is issued in the name of the group which is called the Master Policy. This Master Policy includes the names of all group members and provides coverage to all.

  1. A minimum number of members are required to buy group life insurance plans. Usually, this number is 25 but different plans might have a different minimum requirement of members.
  2. The policy is issued for one year after which it can be renewed for continued coverage.
  3. The sum assured is calculated based on the age of the members or their annual incomes or their level in a hierarchy.
  4. The premium can be paid by the group, its members or partially by the group and partially by the members.
  5. No medical underwriting is usually done for each member of the group. The insurance company underwrites the whole group as one based on the group’s composition and nature.
  6. Every member who is a part of the group gets covered under the plan.
  7. The premium, sum assured and the number of members covered might change on renewal of the policy. This happens because, after a year, the number of members might have changed. Moreover, the age of the members also increases by one year and so the coverage has to be revised.
  8. Riders can be taken with the term insurance cover for additional protection. There are two riders which are usually available. They are –
    • Accidental death and disablement benefit rider which pays an additional sum assured in case of accidental death or disablement
    • Critical illness rider which covers specified critical illnesses and pays a lump sum if the insured suffers from any of the covered illnesses.

If any rider is selected, the premium amount would increase.

  • On renewal of the plan, if the claim experience of the group has been favourable, the insurance company offers discounts on the renewal premiums. A favourable claim experience means that the claim under the policy was low during the coverage year.

How do group life insurance plans work?

The following flowchart explains how group life insurance plans work –

flowchart

Groups eligible to buy group life insurance

Eligible groups that can buy group term insurance plans include the following –

  • Employer-employee groups
  • Banks and their accountholders
  • Clubs and their members
  • Associations and their members
  • Trade unions and their members
  • Financial institutions and their customers
  • Government and the citizen of India

Advantages of group life insurance schemes –

Group life insurance schemes provide various benefits to both the group and the group members. The benefits include the following –

  1. Group members can avail free life insurance coverage if the group is paying premiums for the group life insurance policy.
  2. The premiums of group life insurance plans are very low and affordable. In fact, the premiums prove to be lower than individual insurance plans making it easier to avail group life insurance.
  3. Since no medical underwriting is done separately for members of the group, coverage can be availed by members who are old or are otherwise unable to avail independent life insurance coverage for themselves.
  4. A group life insurance policy boosts morale among employees when their employer invests in an insurance plan on their lives. Employers can, therefore, benefit from increased morale and better employee retention.
  5. Group life insurance plans provide a lump sum benefit to the nominee of the covered member if the member dies during the policy tenure. This benefit helps the nominee deal with the financial loss suffered on the member’s death.
  6. Group life insurance plans also offer tax benefits. The employer can claim the premium paid as an admissible business expense under Section 37. If the employees are contributing towards their group life insurance premiums, the same can be claimed as a deduction under Section 80C up to INR 1.5 lakhs. Moreover, the death benefit received is also tax-free in the hands of the nominees.
  7. Every member joining the group gets the coverage of the group life insurance policy by virtue of his/her membership
  8. The coverage under group life insurance schemes is available worldwide. Even if the insured member dies in another country, the policy would cover the death and pay the death benefit.

Other types of group insurance plans:

There are other types of group insurance policies available in the market.

These include the following –

Types of group insurance plans Meaning
Group gratuity plans These plans cover the gratuity payable by the employer after the employee leaves service after completing 5 working years
Group superannuation plans These plans pay the pension payable to employees retiring from active employment
Group leave encashment plans These plans cover the liability payable by the employer when the employee encashes his/her accumulated leaves
Group health plans These plans provide health insurance coverage to the members of a group

Group life insurance plans are a good way to provide insurance cover to multiple members of the group under a single policy. If you are also a part of a group, look for the coverage available in your group to enjoy affordable coverage without hassles.

FAQs

  1. Is the sum assured restricted under group insurance plans?

Yes, the sum assured is restricted under group life insurance plans. The sum assured is usually determined by the insurance company based on the age, income or position of the member in the group.

  1. How are premiums for group life insurance plans paid?

Premiums under group life insurance plans are paid in one lump sum by the group administrator buying the policy.

  1. Can a member join the policy mid-way?

Yes, if a new member joins a group midway during the coverage tenure, the member can be added to the policy coverage by paying an additional prorated premium for adding the member.

  1. Can minors be covered under group life insurance plans?

No, minors cannot be covered under group life insurance plans. The minimum coverage age is 18 years.

Know About the Latest IRDAI Claim Settlement Ratio 2019

A Comparative List of Different Companies

Life insurance policies are long term contracts. They promise the payment of the plan benefit if the insured dies during the term of the plan. You buy a life insurance policy with the expectation that the plan benefit would give you and your family a financial corpus to tide over tough times. It is, therefore, at the time of claims that the benefit of a life insurance policy is truly felt. But what if your claim is not paid by the company?

Life insurance companies always endeavour to pay all the claims that are intimated to them. However, due to some reason or another, all the claims might not be settled. To measure the proportion of claims that the company has settled, a report of Claim Settlement Ratio (CSR) is calculated and published by the Insurance Regulatory and Development Authority of India (IRDAI). IRDAI calculates the CSR of all life insurance companies in a financial year and publishes it annually. The ratio is, therefore, also called IRDAI Claim Settlement Ratio. Let’s understand what the ratio is all about –

What is Claim Settlement Ratio?

Claim Settlement Ratio, as mentioned earlier too, is the ratio of the number of claims settled by the insurance company against the total claims raised on it. The formula for the ratio is as follows –

Claim Settlement Ratio = (number of claims settled / total claims made) * 100

For instance, if 100 claims are made on an insurance company and the company settles 98 claims, the Claim Settlement Ratio would be 98%.

Importance of Claim Settlement Ratio

The claim settlement ratio of an insurance company highlights the company’s credibility in settling its claims. A high ratio indicates that the company settles a maximum of its claims which is a favourable aspect. It means that your claim would have a higher probability of getting settled. A low ratio, on the other hand, is a bad sign as it shows that the insurer settles a limited number of claims. This might jeopardise your claim settlement and should be avoided. Thus, the claim settlement ratio helps you find out which insurance company is better than the others in terms of claim settlements.

Top #3 Things-to-know about Claim Settlement Ratio:

Here are some important aspects of the ratio that you should know –

  1. The ratio is always expressed as a percentage
  2. If you deduct the ratio from 100, you would get the percentage of claims rejected by the insurance company or pending at its end.
  3. The ratio measures the claims settled in one financial year starting from 1st April of one ear and ending on 31st March of the next year. So, if the ratios are for the financial year 2018-19, it would measure the claim settlement record between 1st April 2018 and 31st March 2019.

Claim Settlement Ratio of Life Insurance Companies:

Here is a table showing the Claim Settlement Ratio of all life insurance companies for the financial year 2017-18:

Name of the company Claim Settlement Ratio
Life Insurance Corporation of India 98.04%
HDFC Life Insurance Company Limited 97.80%
Max Life Insurance Company Limited 98.26%
ICICI Prudential Life Insurance Company Limited 97.88%
Kotak Mahindra Life Insurance Company Limited 93.72%
Aditya Birla SunLife Insurance Company Limited 96.38%
TATA AIA Life Insurance Company Limited 98%
SBI Life Insurance Company Limited 96.76%
Exide Life Insurance Company Limited 96.81%
Bajaj Allianz Life Insurance Company Limited 92.04%
PNB MetLife India Insurance Company Limited 91.12%
Reliance Nippon Life Insurance Company Limited 95.17%
Aviva Life Insurance Company Limited 94.45%
Sahara India Life Insurance Company Limited 82.74%
Shriram Life Insurance Company Limited 80.23%
Bharti AXA Life Insurance Company Limited 96.85%
Future Generali India Life Insurance Company Limited 93.11%
IDBI Federal Life Insurance Company Limited 91.99%
Canara HSBC OBC Life Insurance Company Limited 95.22%
Aegon Life Insurance Company Limited 95.67%
DHFL Pramerica Life Insurance Company Limited 96.62%
Star Union Dai-ichi Life Insurance Company Limited 92.26%
IndiaFirst Life Insurance Company Limited 89.83%
Edelweiss Tokio Life Insurance Company Limited 95.25%

Against the claim settlement ratio, here is a graph showing the claim settled vis-à-vis claim rejected –

As can be seen from the chart, Sahara India and Shriram Life had higher claim rejections and lower claim settlement ratio compared to the other life insurance companies in the market.

Top life insurers as per their claim settlement ratio

If the claim settlement ratios of life insurance companies are compared, here are the top 10 companies which have the highest claim settlement ratio.

Choosing an insurance company with a good claim settlement ratio records is a good practise.Turtlemint uses state of the art technology to provide you the best options for choosing an insurance plan by simply visiting the relevant pages linked below & choosing your insurance type. Apart from Life Insurance you can also buy Health Insurance, Two-wheeler Insurance & Car Insurance.

Choosing the right life insurance company

A life insurance policy ensures financial security in your absence and so you should ensure that you buy the best policy. To choose the best life insurance policy, choice of the best life insurance company is also important. This is where the claim settlement ratio comes into the picture. A company with a higher ratio is better than the one with a lower ratio. However, the claim settlement ratio should not be given importance alone. It should be one factor in the choice of the best policy, other features & benefits of the insurance policy should also be taken into account during comparison after choosing the relevant type of insurance policy here.

This is because of the following reasons –

  1. The claim settlement ratio measures the number of claims settled. It does not indicate the time taken by the insurance company to settle its claims. If the company is settling its claims after a long time, a high ratio would be of no importance. You would not get the claims quickly and easily which might have a negative impact.
  2. The ratio measures the claims settled in one financial year. If a claim is presented on 28th March, it might be settled in the first week of April. In such a case, the claim would be considered to be made but not settled. The claim is not reflected to be pending with the insurer.
  3. Besides the claim settlement ratio, the other facets of the policy should be compared. You should give importance to the coverage benefits, premium rate, policy duration, available riders, etc. to choose the best policy. Choosing a policy inferior in terms of coverage and premium over a superior policy simply because of the company’s high claim settlement ratio might not be the most prudent choice.

Choosing the right insurance policy can be a daunting and intimidating task, especially if you are a beginner, please feel free to reach out to our support team in the chat option on this webpage to help us assist you.

If you wish to browse life insurance plans yourself, visit this page & simply choose your policy requirement type along with a few details to help us show you the most relevant insurance policies

IRDA’s Claim Settlement Ratio is an important parameter when comparing life insurance companies but it should not be the only one. Shortlist a policy after judging its suitability in terms of coverage, premiums, policy term and other factors and then consider the claim settlement ratio to make the final choice.

 

Know everything about UTI unit linked insurance plan

The Unit Trust of India is one of the oldest Asset Management Companies in India which was established in the year 1964. UTI provides different types of mutual fund schemes for investors. The company not only offers mutual funds but other services too like portfolio management services, venture funds, retirement solutions, etc. The company is one of the leading Asset Management Companies in the market with a presence across 150 branches in India and having investor accounts or more than 1 crore individuals.

Besides the different types of mutual fund schemes offered, UTI also offers a unit-linked insurance plan which combines the benefit of insurance cover and investment returns under one.

Let’s understand the plan in details –

What is a unit-linked insurance plan?

A unit-linked insurance plan is a plan which provides insurance coverage as well as market-linked returns. The investments made under a unit-linked plan are invested in market securities. Thereafter, as the securities perform, the investment grows. There is also an insurance cover which pays a lump sum benefit if the investor dies during the term of the plan. Thus, unit-linked insurance plans give you the benefit of mutual funds like investments and also provide financial security through insurance coverage in case of untimely demise.

UTI Unit Linked Insurance Plan:

UTI launched is a unit-linked insurance plan on 1st October 1971. Thereafter, the fund has attracted many investors and the Assets under Management as on 31st July 2019 stands at INR 4182.03 crores. Here are the salient features of the plan –

  • The plan comes in two variants of Direct and Regular. Direct plans can be bought directly from UTI while Regular plans can be bought through mutual fund brokers.
  • The fund invests in debt and equity instruments in the ratio of 60%:40%. Since debt exposure is high, returns are more stable. While equity investments promise attractive returns, debt investments bring stability to the fund portfolio.
  • No pre-entrance medical check-ups are required to buy the plan.
  • You can invest the premium in a lump sum or through SIPs.
  • There is no entry load on your investments. This means that the entire premium paid is utilised for investment promising higher returns.
  • You can opt for Systematic Transfer Investment Plan (STRIP) and choose to invest in UTI ULIP in a systematic manner. Under the STRIP option, the investment would be done from another plan to UTI ULIP at regular intervals.

The investment objective of the UTI Unit-Linked Insurance Plan:

The scheme aims to maximize wealth over a long-term period by investment in equity and debt instruments. It also aims to provide life insurance coverage to investors during the plan tenure so that they can secure themselves financially.

Plan parameters of the UTI Unit-Linked Insurance Plan:

Here are some of the important parameters of the plan

Who can buy? Resident individuals and NRIs. The plan can also be bought in the name of the spouse or dependent children
Duration of the plan 10 years or 15 years
Entry age Plan term 10 years – 12 to 55.5 years

Plan term 15 years – 12 to 50.5 years

Minimum investment into the scheme INR 15,000
Maximum investment into the scheme INR 15 lakhs
Life insurance cover INR 15 lakhs
Life insurance cover for non-earning females Up to INR 5 lakhs
Exit load 2% if withdrawal is done before the completion of the tenure
Total Expense Ratio Direct plan – 1.17%

Regular plan – 1.81%

Benchmark index CRISIL Short Term Debt Hybrid 60+40 Fund Index

Plan benefits of the UTI Unit-Linked Insurance Plan:

The plan offers the following benefits –

  • Life insurance cover:

A life insurance cover of up to INR 15 lakhs is available under the plan. You can choose to avail the cover in the following two options –

  • Declining Term Insurance Cover wherein the coverage amount would reduce every year
  • Fixed Term Cover wherein the coverage amount would remain the same throughout the term of the plan.

In case of premature death of the insured, the applicable coverage amount would be paid.

There is also an inbuilt personal accident insurance cover under the plan. The cover is allowed for up to INR 50,000. If the insured dies in an accident, the additional coverage of INR 50,000 would be paid along with the sum assured.

  • Bonus

Despite the fact that the investments earn attractive market-linked returns, UTI’s unit-linked insurance plan also offers guaranteed bonus to investors. Bonus is paid once the duration of the scheme comes to an end. The bonus payable under the 10-year scheme is 5% and for the 15-year scheme is 7.5%. Moreover, if you continue your investments in the scheme even after the duration is over, you would get a 0.5% additional bonus on the target amount. This is called post maturity bonus and the bonus is paid for each additional year after maturity till you remain invested in the scheme.

  • Maturity benefit

Once the chosen duration of the plan comes to an end, you can withdraw the accumulated corpus in full. There would be no exit load charged on such withdrawal. Once a withdrawal is done, the plan would be terminated.

  • Premature withdrawals

You can withdraw from the scheme completely or partially any time that you want before the chosen term comes to an end. However, for each premature withdrawal, an exit load of 2% would be applicable.

The investment portfolio of the scheme:

As mentioned earlier, UTI Unit Linked Insurance Plan invests in equity and debt in the ratio 40:60. The exact asset allocation of the fund is as follows –

asset allocation

The top 5 sectors into which the fund invests are as follows –

fund invests

The performance of the fund, in terms of absolute returns, as compared to its benchmark index and CRISIL 10-year Gilt Index over different periods is as follows –
performance

NAV of the UTI Unit Linked Insurance Plan scheme:

The current Net Asset Value of UTI ULIP stands as follows –

Type of scheme Net Asset Value as on 30th August 2019
Regular INR 23.8954
Direct INR 24.6981

(Source:https://www.moneycontrol.com/mutual-funds/nav/uti-unit-linked-insurance-plan/MUT018 and https://www.moneycontrol.com/mutual-funds/nav/uti-unit-linked-insurance-plan-ulip-direct-plan/MUT663)

Why buy UTI ULIP?

  1. You get a free insurance cover to provide financial security for your family in case of your untimely demise.
  2. There is an added accidental cover which pays an enhanced benefit in case of accidental death.
  3. You can enjoy attractive returns at low volatility because of the composition of the fund and its asset allocation.
  4. You can avail easy liquidity by withdrawing from the scheme whenever you want.
  5. The premium that you pay would be eligible for tax deductions under Section 80C of the Income Tax Act. You can claim deductions of up to INR 1.5 lakhs through investing in the scheme.
  6. The plan can be easily bought since there are no medical check-ups which you need to undergo for buying the policy.

UTI ULIP, therefore, gives you many benefits including insurance. You can trust the expertise of the oldest Asset Management Company (UTI) to provide you with the best returns on your investments. So, invest in UTI’s unit-linked plan and enjoy the benefit of investment as well as insurance.

FAQs

  1. What is the mode of investing in the scheme?

You can invest annually, half-yearly or through SIPs.

  1. What is the tax implication on capital gains earned from the scheme?

When the plan matures after the selected tenure, the capital gains that you earn would be subject to taxation. Since the plan invests predominantly in debt instruments, the capital gains would be taxed @20% with indexation benefit.

  1. What is the tax implication of the death benefit?

The death benefit would be a tax-free income in the hands of the nominee under Section 10 (10D).

  1. Can investments of more than INR 15 lakhs be made towards the scheme?

Yes, you can invest more than INR 15 lakhs but the target amount of investment and the insurance coverage would be available only up to INR 15 lakhs.

How to interpret the medical claim settlement ratio for health insurance companies?

Health insurance policies have become the most essential part of everyone’s financial portfolios. Medical costs are rising unchecked and without a health insurance policy to pay for the bills, a medical contingency seems like a curse. When you have a health insurance policy you are assured of availing quality healthcare facilities as the policy promises to pay for the hospital bills which would incur. It, therefore, spares you the financial horror of a medical contingency and safeguards your savings.

There are various health insurance companies in the market which offer some of the best policies with comprehensive coverage benefits. However, it is important to judge the claim settlement history of the company. Though health insurance policies promise settlement of your medical bills, if the company does not pay the claim, the policy would not fulfil its promise. That is why the medical claim settlement ratio of the company is required to be checked.

The Insurance Regulatory and Development Authority of India (IRDAI) publishes the Incurred Claims Ratio of health insurance companies after the end of every financial year. This report shows the claims paid by the company against its premium earnings. Let’s understand the concept of Incurred Claims Ratio in details –

What is Incurred Claims Ratio?

Incurred Claims Ratio is the ratio of the total amount of claims paid by an insurance company against the total amount of premiums earned.

For example, if in a financial year the company settles claims of INR 5 crores and earns a premium of INR 8 crores, the Incurred Claims Ratio for that financial year would be [(5/8) * 100] = 62.5%

The formula for calculating the ratio is as follows –

Incurred Claims Ratio = (total amount of claims paid / total amount of premiums collected) * 100

Important aspects of the ratio

Here are some of the important features of Incurred Claims Ratio –

  • The ratio is expressed as a percentage. It can be below 100% or even more than that.
  • The ratio is calculated taking into consideration the number of claims paid and premiums collected in one financial year. So, if the ratio is for the financial year 2018-19, it would consider the claims paid and premiums collected between 1st April 2018 and 31st March 2019
  • The ratio uses the amount of claim paid vis-à-vis premium collected. It does not represent the number of policies for which the claim was paid.
  • The time taken in settling the claim is not considered in calculating the ratio

Interpreting the Incurred Claims Ratio

The Incurred Claims Ratio depicts the percentage of premium used by the insurance company to pay its claims. The ratio can, therefore, be depicted in the following ways –

  • If the ratio is more than 100%, it shows the company is paying more in claims compared to the premiums collected. This shows that the company is making a loss and might face a problem in paying future claims.
  • If the ratio is very low, i.e. between 20% and 50%, it shows that the company is earning high volumes of premiums but the claims are very less. This shows that the company is making too much profit. It might also show that the premiums charged by the company are very high which is resulting in a lower ratio. Alternatively, it might also show that the company has a very low claim experience.
  • If the ratio is between 60% and 90%, it shows that the company is in a comfortable position to pay its claims. The premiums are not very high and allow the company to generate profits for sustainability. In fact, the ratio in this range is considered to be a good indicator of the company’s solvency.

Medical Claim Settlement Ratio (CSR) & Incurred Claims Ratio (ICR) of Top #31 Health Insurance Companies

Here is a comparative analysis of Medical Claim Settlement Ratio & Incurred Claims Ratio of top 31 health insurers for the financial year 2018-19 –

Name of the insurer Incurred Claim Ratio (ICR)
Acko General Insurance Limited 24%
Aditya Birla Health Insurance Company Limited 59%
Apollo Munich Health Insurance Company Limited 63%
Bajaj Allianz General Insurance Company Limited 85%
Bharti AXA General Insurance Company Limited 89%
Cholamandalam MS General Insurance Company Limited 35%
Manipal Cigna Health Insurance Company Limited 62%
DHFL General Insurance Limited 46%
Edelweiss General Insurance Company Limited 115%
Future Generali India Insurance Company Limited 73%
Go Digit General Insurance Limited 11%
HDFC Ergo General Insurance Company Limited 62%
ICICI Lombard General Insurance Company Limited 76%
IFFCO Tokio General Insurance Company Limited 102%
Kotak Mahindra General Insurance Company Limited 47%
Liberty General Insurance Limited 82%
Magma HDI General Insurance Company Limited 90%
Max Bupa Health Insurance Company Limited 54%
National Insurance Company Limited 107.64%
Raheja QBE General Insurance Company Limited 33%
Reliance General Insurance Company Limited 94%
Religare Health Insurance Company Limited 55%
Royal Sundaram General Insurance Company Limited 61%
SBI General Insurance Company Limited 52%
Shriram General Insurance Company Limited 53%
Star Health & Allied Insurance Company Limited 63%
TATA AIG General Insurance Company Limited 78%
The New India Assurance Company Limited 103.74%
The Oriental Insurance Company Limited 108.80%
United India Insurance Company Limited 110.51%
Universal Sompo General Insurance Company Limited 92%

 (Source: IRDAI)

The top claim settlement ratio for health insurance companies are calculated by the companies themselves based on the annual reports published by the IRDA. IRDA, however, does not publish the best health insurance claim settlement ratios for general insurance companies. The claim settlement ratios are published for life insurance companies only. So, the Incurred Claims Ratio is the best ratio to judge the performance of health insurance companies.

Other important ratios:

Besides the Incurred Claims Ratio, here are some other important ratios which you should consider –

  • Claim rejection ratio – this ratio measures the percentage of claims rejected by the insurance company against the total claims made on it. The ratio is calculated as follows –

    Claim rejection ratio = (number of claims rejected / total claims made) * 100

    The ratio helps you check the history of claim rejection by an insurance company.

  • Pending claim ratio – this ratio shows the number of claims which are pending with the insurance company at the end of the financial year. The formula is as follows –

    Pending claim ratio = (number of claims pending / total claims made) * 100

  • Medical Claim settlement ratio– Claim settlement ratio of health insurance companies is an important ratio which is also advertised by health insurance companies. This ratio measures the numbers of claims settled by the insurer against the total number of claims made upon it. The calculation is done using the following formula –

    Medical Claim settlement ratio= (number of claims settled / total claims made) * 100

All these ratios give an insight into the efficacy of handling claims by the insurance company. As such, before buying a health insurance policy, these ratios should be checked.

Incurred Claims Ratio vis-à-vis Claim Settlement Ratio of health insurance companies

There is often confusion between the concepts of Incurred Claims Ratio and Claim Settlement Ratio of health insurance companies. Claim settlement ratio of health insurance companies is quite a popular concept which measures the number of claims settled by the insurance company. ICR, on the other hand, shows the financial capacity of the company to settle its claims. Other differences between ICR and CSR include the following –

Incurred Claim Ratio (ICR) Claim Settlement Ratio (CSR)
The ratio is calculated for general insurance companies The ratio is calculated for life insurance companies
The ratio uses monetary values of claims paid against premiums earned The ratio uses absolute values of the number of claims paid against the total number of claims made

Both these concepts are, therefore, different from one another. However, you should check both the ratios when finalising your health insurance policy.

Top health insurance companies in terms of Incurred Claim Ratio:

Here is a graph showing the top ten health insurance providers based on their ICR for the financial year 2017-18 –

graph

How to choose the best health insurance policy?

To choose the best health insurance policy, the incurred claims ratio or the best health insurance claim settlement ratio of the health insurance company should not be the sole parameter. You should judge the policies on the following parameters too –

  • The coverage offered – the wider the better
  • The premium charged – the lower the better
  • Sub-limits or limits on coverage features – as minimal as possible
  • Waiting period for pre-existing illnesses – the lower the better
  • Value-added benefits – the more the merrier


After comparing the plans on these parameters you should consider the ICR, best health insurance claim settlement ratio and other relevant ratios discussed above and then make your choice. When you make a well-researched choice of health plan, you would be rewarded with good coverage at affordable premiums. What’s more, your claims would also be settled quickly and smoothly. Isn’t that what you want?

Frequently Asked Questions

1. What is claim settlement ratio?

Claim settlement ratio is the percentage of claims settled by the insurance company against the total number of claims made against it. So, if an insurance company settles 95 out of 100 claims made on it in one financial year, its claim settlement ratio would be 95%.

2. What is claim ratio in health insurance?

Claim ratio in health insurance is equal to the claim settlement ratio of an insurance company. It shows the percentage of claims settled by the health insurance company against the total claims made on it in one financial year.

3. What is Incurred Claims Ratio?

Incurred Claims Ratio is the percentage of premiums used up in paying for claims in one financial year. The ratio is measured as the amount of claims paid in one year against the amount of premiums earned by the insurance company. So, if an insurance company earns INR 100 in premium and pays INR 75 in claims, the incurred claims ratio would be 75%.

4. What is difference between Incurred Claims Ratio & claim settlement ratio

Both these ratios measure different things. The claim settlement ratio (CSR) measures the number of claims settled by the insurance company against the total claims made. The incurred claims ratio (ICR), on the other hand, measures the amount of premium used to pay the claims. While the CSR shows the goodwill of the company in paying its claims, the ICR shows the financial standing of the company. The CSR can never be greater than 100% but the ICR can be. Moreover, a high CSR is desirable but a high ICR shows that the company is paying most of its premiums for claims and is a bad indicator of the company’s financial standing.

All you need to know about zero depreciation rider in a bike insurance plan: A complete guide

The Motor Vehicles Act, 1988 lays down the rules and regulations for motor vehicles running in India. One such rule which is mandatory under the Act is the requirement of a valid bike insurance policy if you own a bike. The Act states that every bike on Indian roads should be insured under a valid third party liability cover. The policy would cover the financial liability incurred if the bike causes injury, death or property damage to another individual.

Though third party policies are mandatory by law, they do not cover the damages suffered by the bike itself. That is why there are comprehensive package policies. Comprehensive bike insurance plans cover the mandatory third-party liability as well as the damages suffered by the bike itself. If your bike is stolen, damaged in an accident or damaged due to any natural or man-made causes, the comprehensive policy would pay the financial loss that you suffer.

Bike insurance policies are indemnity oriented plans. They pay for the actual financial loss that you suffer. That is why, in a comprehensive policy, when there is a claim for the parts of the bikes which have been repaired or replaced, the insurance company does not pay the actual cost incurred. The depreciation of the parts is taken into consideration to find the actual value of the parts which have been replaced or repaired.

The Rate of Depreciation:

The rate of depreciation in different parts is as follows –

Bike parts The applicable rate of depreciation
Rubber, plastic or nylon parts 50%
Fibreglass parts 30%
Tyres and tubes 50%
Metal parts As per the depreciation of the Insured Declared Value of the bike

This depreciation reduces the total amount of claim payable under the bike insurance policy.

For instance, suppose your bike meets with an accident and the following costs are incurred in repairs –

Repairs of the plastic parts of the bike INR 7500
Change of tyre INR 5000
Repair of fibreglass parts INR 5000
Labour charge INR 5500
The total cost of repairs INR 23,000

However, at the time of claim, depreciation would be taken into consideration and the amount of claim payable would be determined as follows –

Particulars Amount Applicable depreciation Admissible claim amount
Repairs of the plastic parts of the bike INR 7500 50% INR 3750
Change of tyre INR 5000 50% INR 2500
Repair of fibreglass parts INR 5000 30% INR 3500
Labour charge INR 5500 Nil INR 5500
Total claim payable INR 15,250

Though the repair costs incurred were INR 23,000, the insurance company would pay a claim of INR 15,250 only. The remaining INR 7750 would have to be paid by you from your own pocket.

Zero depreciation add-on – the solution:

Since depreciation eats into the claim amount, insurance companies offer a zero depreciation add-on cover. If you choose this add-on, the effect of depreciation would be ignored at the time of calculating the claim amount. The insurance company would pay the total amount incurred in replacing or repairing the parts of the bike.

Zero depreciation bike insurance policy – the inclusions and exclusions:

A zero depreciation bike insurance policy is nothing but a comprehensive bike insurance policy with a zero depreciation add-on. The policy, therefore, covers the following instances of claims –

  • Third-party liability incurred for death or physical injury suffered by a third party
  • Third-party liability for property damage
  • Damage to the bike due to natural or man-made causes
  • Theft or robbery of the bike
  • Personal accident cover for accidental deaths or disablements

Moreover, there are instances when the policy would not cover the losses suffered. These instances are called exclusions and they include the following –

  • Damages suffered when driving under the influence or without a valid driving license
  • Damages suffered outside the boundaries of India
  • Consequential losses
  • Damages suffered when the bike is being used against the limitations of its use
  • Mechanical or electrical breakdowns

#4 Important things to remember about Zero Depreciation rider in a Motor Insurance Policy

If you opt for a zero depreciation bike insurance policy, here are some points which you should keep in mind –

  1. The zero depreciation cover is an add-on which is voluntary in nature. You can choose the cover if you want by paying an additional premium for the same.
  2. The add-on cover is available for bikes which are up to 5 years old. If your bike is older than five years, the cover would not be available.
  3. There are limits on the zero depreciation claims which you can make over the entire duration of your bike insurance policy. Usually, the benefit of zero depreciation add-on is allowed for up to 2 claims. These claims can be within the tenure of one policy or multiple policies. For instance, suppose you buy an annual zero depreciation policy on 1st January 2016 and make a claim in August. Thereafter, you make another claim in the year 2018. Once two claims have been made, albeit, in different policies, the coverage of zero depreciation add-on would stop. If in future years, any more claims are made, depreciation would be applied to the claim amount.
  4. Zero depreciation add-on is available only in comprehensive bike insurance policies. Third-party liability only plans do not have this cover.

Benefits of zero depreciation add-on:

A zero depreciation add-on is a very beneficial coverage to avail simply because the cover enhances the amount of claim. In the above example, if there is no zero depreciation cover, the insurance company pays only INR 15,250 towards a claim. However, if a zero depreciation cover is added, the claim amount would become INR 23,000. You, therefore, would not have to bear the cost of depreciation of your bike’s parts. Your out-of-pocket expenses would reduce and you would be able to save on the repair costs.

A comprehensive bike insurance policy is a must if you want an all-round protection for your bike. Moreover, when you add the zero depreciation add-on to the cover, it is like icing on the cake. You get an enhanced coverage which saves thousands on claims. So, opt for a zero depreciation cover and make your bike insurance policy more inclusive.

 

A complete list of all the different types of insurances available in India

Insurance is a risk management tool that promises compensation for the economic loss suffered by an individual in case of specific events. Insurance policies cover different types of risks and if such risks occur and cause a financial loss, the policies pay for the loss suffered. Insurance plans, therefore, provide financial security and should be an important part of your financial portfolio.

Nowadays, individuals have become increasingly aware of the importance of having an insurance plan to cover their financial risks. As such, they are investing in different types of insurance policies for their needs. Whether it is mandatory motor insurance plans or the essential term insurance or health insurance plans, the penetration of insurance is increasing in India. Before you also invest in a suitable insurance plan, you should first understand the different types of policies available and which policy covers which risks.

So, here is a brief overview of different types of insurance plans available in India –

Classification of insurance plans in India

Broadly, the classification of insurance plans can be done under two divisions – life insurance and general insurance. Life insurance covers human lives while general insurance covers financial assets and risky events. Both life and general insurance categories have different types of plans under them. Let’s understand these variants of life and general insurance policies in brief –

Life insurance

Here is a table containing the brief details of different types of life insurance plans –

Name of the plan

Term Plan

Meaning

These plans cover the risk of premature death.

  • If the insured dies during the term of the plan, the sum assured is paid. Term plans, usually have no maturity benefit.
  • However, in return of premium plans, the premiums paid are refunded if the insured survives till maturity

Salient Features

  • Allows you to opt for a high sum assured for maximum financial security
  • The coverage can be enhanced by adding riders
  • Premiums are extremely low

Benefits Payable

The sum assured is paid on death of the insured.

Variants available

There are four types of term plans –

  1. Level term plans where the coverage remains the same forever,
  2. Increasing term plans where the sum assured increases every year,
  3. Decreasing term plans where the sum assured decreases every year,
  4. TROP or Term Plan with the return of premium option which returns the premiums on maturity

Name of the plan

Whole life plan

Meaning

The plan usually matures when the insured attains 100 years of age.

  • It, therefore, covers the individual for his whole life
  • If the insured dies during the plan tenure, the death benefit is paid.

Salient Features

  • The plan runs for the lifetime of the insured
  • Premiums, however, are paid up to a limited period

Benefits Payable

The sum assured is paid on the death of the insured any time before attaining 100 years of age.

Name of the plan

Endowment Plan

Meaning

This plan is a savings-oriented insurance plan which not only provides coverage against premature death, it also creates a corpus for the policyholder at the end of the plan term.

Salient Features

  • Guaranteed benefits are paid under the plan
  • These plans might or might not earn bonuses
  • Guaranteed additions, loyalty additions, etc. are added to the plan benefit to enhance it

Benefits Payable

  • The sum assured is paid on the death of the insured during the policy tenure
  • If the policy matures, a maturity benefit is paid.

Variants available

Pure Endowment, Money Back Plan, Child Plan, etc.

Name of the plan

Money-Back Plan

Meaning

This plan creates guaranteed returns over the policy tenure, provides insurance coverage and also allows liquidity. The sum assured is paid in parts over the term of the policy at regular intervals.

Salient Features

  • Money-back benefits, called survival benefits, are paid at regular intervals during the policy term
  • The plan earns a bonus which is paid on maturity or death
  • The sum assured is paid in full irrespective of the money-back benefits paid.

Benefits Payable

Survival benefits are paid over the policy tenure

  • If the insured dies, the sum assured and bonus are paid.
  • If the policy matures, the remaining sum assured and bonus are paid.

Name of the plan

Child Plan

Meaning

These plans are designed to secure the financial future of the child even if the parent dies during the term of the policy.
Either the parent’s or the child’s life is insured in this plan.

Salient Features

  • The plan usually has an inbuilt premium waiver rider. This rider waives the premiums if the parent dies during the policy tenure.
  • The premiums are then paid by the insurer on behalf of the parent.
  • The plan runs till maturity whereupon the promised maturity benefit is paid.
  • The plan can be a traditional plan or offered as a unit-linked plan.

Benefits Payable

  • If the parent dies during the policy term, a death benefit is paid but the plan continues as per schedule.
  • If the plan is a money-back plan, survival benefits would be paid as and when they are due.
  • When the plan matures, the maturity benefit is paid.

Name of the plan

Unit Linked Insurance Plan

Meaning

These are market-linked plans where the premium is invested in market-linked funds. The returns, therefore, depend on market performance.

Salient Features

  • ULIPs promise investment returns and insurance coverage
  • The returns are not guaranteed
  • Partial withdrawals allow liquidity from the 5th policy year
  • The plan is flexible as you can switch between funds, pay additional premiums through top-ups and also opt for riders.

Benefits Payable

In case of death, the higher of the sum assured or the fund value is paid.
If the plan matures, the fund value is paid.

Name of the plan

Pension Plan

Meaning

These are retirement-oriented plans which create a regular income in the form of annuities. Annuities are paid throughout the insured’s lifetime thereby providing funds even in the older years.

Salient Features

  • There are two types of pension plans – deferred pension plans and immediate annuity plans
  • The amount of annuity is chosen as per the annuity option available
  • Under deferred pension plans premiums can be paid over the policy tenure to accumulate a corpus

Benefits Payable

Under deferred annuity plans,

  • If the insured dies during the policy tenure, a death benefit is paid.
  • After the plan matures, 1/3rd of the accumulated corpus can be withdrawn tax-free.
  • The remaining corpus is used to avail annuity payments.

Under immediate annuity plans, an annuity is paid immediately after the plan is bought, depending on the annuity option available.

Variants available

Immediate Annuity and Deferred Annuity.

Annuity Options

There are 7 different possible annuity options and multiple variants of the same. Different annuity providers have different annuity options like:

  1. Life Annuity
  2. Joint Life Annuity
  3. Increasing Annuity
  4. Annuity Certain for 5, 10, 15, 20, 25 years
  5. Life Annuity with 50% or 100% annuity to the spouse after the annuitant’s death
  6. Life Annuity with Return of Purchase Price
  7. Joint Life Annuity with the Return of the Purchase Price

Name of the plan

Health Plans

Meaning

These plans cover specific illnesses and help the policyholder with financial assistance if the insured suffers from the covered medical illness.
The health plans offered by Life Insurance companies are usually fixed benefit health insurance plans which cover a specific illness.

Salient Features

  • Health plans can cover critical illnesses, heart-related illnesses or cancer.
  • The premiums are low and affordable.

Benefits Payable

The sum insured is paid in a lump sum if the illness covered under the plan occurs.

Coverage and exclusions in life insurance plans:

Here are the inclusions and exclusions of life insurance policies

Inclusions

Exclusions

Death during the policy tenure due to accidental or natural causes

Death due to suicide within one year of policy inception or revival

Health plans cover specific illnesses

Death due to criminal activities, adventure sports, etc.

Death after the policy has been terminated

Calculation of premium:

Premiums of life insurance plans are calculated based on the following factors –

  1. Age of the insured – the older the insured the higher would be the premium
  2. Sum assured chosen – higher the sum assured, higher would be the premium
  3. Term of the plan – higher the term, lower would be the premium
  4. Medical history – if the medical history is adverse, the premiums are loaded and are, therefore, higher. If there is no history of medical complications, the premiums would be charged at the standard rate
  5. Gender – premium rates for females are lower than males
  6. Occupation – if the insured is engaged in a dangerous occupation, the premium is loaded. The premiums charged are, therefore, higher.

General insurance:

There are multiple variants in the general insurance category. However, some of the most popular types of plans include the following –

Each of the above-mentioned types of general insurance plans is further sub-divided into different variants to suit the different coverage needs of individuals. So, let’s understand each type of general insurance plan in brief along with its sub-variants –

Health insurance

Health insurance plans are those which cover the medical costs if you face a medical contingency. Health insurance plans cover hospitalisation related expenses incurred when the insured is hospitalised.

The different types of health insurance plans include the following –

Name of the plan

Individual Health Insurance Plan

Meaning

Health insurance plans which cover a single individual

Coverage Details

Hospitalisation expenses like room rent, doctor’s fees, nurse’s fee, cost of surgery, blood, etc., daycare treatments, organ donor expenses, free health check-ups, ambulance costs, etc. on an indemnity basis

Name of the plan

Family floater health insurance plans

Meaning

  • Health insurance policy covers the entire family under a single umbrella plan.
  • Covers self, spouse, dependent children and dependent parents/in-laws can be covered under a single sum insured.

Coverage Details

Expenses incurred before and after hospitalisation, hospitalisation expenses like room rent, doctor’s fees, nurse’s fee, cost of surgery, blood, etc., daycare treatments, organ donor expenses, free health check-ups, ambulance costs, etc. on an indemnity basis.

Name of the plan

Senior citizen health insurance plans

Meaning

Health plans cover individuals aged 60 years and above. This could be on an individual basis or a family floater basis.

Coverage Details

Coverage for hospitalisation expenses, ambulance charges, daycare treatments, cataracts, joint replacement treatments, etc. on an indemnity basis

Name of the plan

Critical illness insurance plans

Meaning

Health plans which cover major illnesses and surgical procedures.

Coverage Details

The sum insured is paid in a lump sum if the insured suffers from any covered illness or undergoes a covered treatment. Illnesses like cancer, paralysis, open heart surgeries, organ transplants, etc. are covered.

Name of the plan

Hospital cash plans

Meaning

Health plans pay a fixed benefit if the insured is hospitalised for a period of 24 hours or more.

Coverage Details

A daily cash allowance is paid on hospitalisation. The amount of allowance would be fixed and independent of the actual medical costs incurred.

Name of the plan

Top-up health insurance plans.

Meaning

Health plans come with a deductible limit. Claims exceeding the deductible are paid under the plans.

Coverage Details

Hospitalisation expenses, pre and post hospitalisation expenses. ambulance costs, etc. are covered on an indemnity basis.

Name of the plan

Super top-up health insurance plans.

Meaning

Health plans with deductibles. If the aggregate claims exceed the deductible limit, the plan would cover the excess cost.

Coverage Details

Coverage is allowed for hospitalisation expenses, ambulance charges, daycare treatments, organ donor expenses, etc. on an indemnity basis.

Name of the plan

Disease-specific health insurance plans.

Meaning

Health plans cover specific illnesses like diabetes, cardiac ailments, dengue, etc.

Coverage Details

Hospitalisation expenses incurred due to the illnesses covered by the plan are paid on an indemnity basis.

Exclusions in health insurance plans

Here are some common instances of exclusion in almost all health insurance plans –

  • Pre-existing illnesses are covered after a waiting period of 2-4 years.
  • Specific illnesses and their treatments, like hernia, appendicitis, piles, joint replacement surgeries, etc. are covered after 1-2 policy years.
  • No claim is paid for illnesses within the first 60-90 days of buying the policy.
  • Illnesses due to nuclear or radioactive contamination, war, mutiny, participation in adventure sports, etc. are not paid.
  • Maternity expenses are not included in the coverage unless specifically stated otherwise.
  • HIV/AIDS
  • Alcohol or substance abuse
  • Cosmetic treatments
  • Psychiatric treatments, etc.

Calculation of health insurance premiums

Premiums of a health insurance policy is calculated taking into consideration the following factors –

  • Age of the insured – the higher the age the higher would be the premium
  • Existing medical conditions – if the insured suffers from any existing medical illnesses, the premiums would be increased
  • Gender – females are charged a lower premium than males
  • The term selected – if a longer-term is selected, premium discounts are allowed which reduce the premium
  • Premium discounts – if there are premium discounts offered by the company, the premium would reduce
  • Sum insured selected – higher the coverage amount, higher would be the premium
  • A number of members covered – if family members are also added to the coverage, the premium would increase.

Motor insurance

Motor insurance is taken on vehicles. A motor insurance policy that covers damages caused to third parties is mandatory as per law. Every vehicle on Indian roads is supposed to have a valid insurance cover to be able to run legally.

Motor insurance plans are separately designed for cars, bikes and commercial vehicles. Moreover, there are two types of policies which are as follows –

Third-party liability-only policy

Comprehensive policy

This policy covers the financial liability which incurs if the owner/driver of the vehicle causes bodily injury or death of any individual. Moreover, if any property belonging to a third party is damaged by the vehicle, the financial liability faced for such damage is also covered by the policy.

This policy combines coverage for third party liability and damages suffered by the vehicle itself. Third-party liability due to bodily injury or property damage is covered under the policy. Moreover, if the vehicle itself suffers any damage due to theft, natural causes or man-made causes, the loss suffered is also covered.

There is also a personal accident cover under both these plans. Under the personal accident cover, accidental death and disablement suffered by the owner/driver of the vehicle are covered for up to INR 15 lakhs. In case of accidental death or disablement, a lump sum benefit is paid.

Exclusions of Motor Insurance Policies:

Motor insurance policies do not cover damages incurred due to the following instances –

  • War or war-like perils
  • Nuclear contamination
  • Driving without a valid license
  • Driving under the influence of alcohol
  • Using the vehicle in violation of its limitations
  • Deliberate accidents
  • Driving outside India
  • Electrical or mechanical breakdown, etc.

A premium of motor insurance plans:

Premiums for a motor insurance policy depends on the following factors –

  1. Make, model and variant of the vehicle
  2. Insured Declared Value (which is like the sum insured of the policy and represents the value of the vehicle after depreciation )
  3. Fuel type
  4. Year of registration
  5. Age of the vehicle
  6. Third-party premium
  7. Modifications that were done to the vehicle if any
  8. Type of coverage required
  9. Add-ons selected if any
  10. Location of the vehicle
  11. No claim bonus discount if any
  12. Any other discount offered by the policy

Travel insurance

Travel insurance policies cover the financial losses suffered due to emergencies when you are travelling to another place. The trip might be for leisure, business or education and there is a travel insurance plan to cover the losses faced in any of these trips.

Travel insurance plans are further subdivided into the following categories –

Types of travel insurance plans

Meaning

International travel insurance

Covers losses suffered on international trips

Domestic travel insurance

Covers losses suffered on trips within India

Senior citizen travel insurance

Covers individuals aged 60 years and above going on a trip

Single trip travel insurance

Covers a single trip taken for a specified duration

Annual multi-trip travel insurance

Covers unlimited trips taken within a year

Student travel insurance

Covers students going abroad for education

Coverage and exclusions in travel insurance plans:

Inclusions

Exclusions

Medical treatments taken in an emergency when travelling

Pre-existing illnesses and their complications

Medical evacuation and repatriation

Travelling against the advice of a medical professional

Accidental death and disablement

Participation in hazardous activities

Personal liability

War and related perils

Emergency cash advance

Nuclear contamination

Loss of checked-in-baggage

Pregnancy and related complications

Delay of checked-in-baggage

Criminal acts, etc.

Loss of passport

Trip cancellation or curtailment, etc.

Calculation of travel insurance premiums

Premiums of travel insurance plans are calculated based on the following parameters –

  1. Number of members travelling together
  2. Age of the insured members
  3. Destination of travel
  4. Duration of the trip
  5. Additional covers, if opted
  6. Sum insured selected
  7. Coverage features

Home insurance

Home insurance policies are those which cover the financial loss suffered if the home and/or its contents are damaged. Home insurance policies prove to be beneficial in covering the losses suffered by your home due to natural or man-made calamities.

There are three types of home insurance policies which include the following –

Type of policy

Meaning

Structure insurance

This policy covers the structure of the home against damage or destruction

Contents insurance

This policy covers the contents of the home like electronic appliances, furniture and fittings, jewellery, work of art, personal belongings, etc. against theft or damage

Comprehensive insurance

This policy covers both the structure of the home as well as its contents

Coverage and exclusions in home insurance plans:

Home insurance policies have the following coverage and exclusions:

Inclusions

Exclusions

Damage to the structure due to natural or man-made causes

Loss due to war or war-like conditions

Theft of contents of the home

Wilful negligence

Third-party liability

Consequential loss

Cost of alternate accommodation when the house is being repaired or rebuilt

Nuclear contamination

Depreciation

A premium of home insurance policies:

The premium of a home insurance policy depends on the following factors –

  • The type of policy selected
  • The cost of the property
  • Cost of contents to be insured
  • Policy extensions, if selected
  • Location of the property
  • Basis of insurance – reinstatement or market value
  • Size of the property

Fire Insurance:

Fire insurance policies are those which cover the financial loss suffered if an asset is destroyed or damaged by fire and allied perils.

Fire insurance policies can be of the following types –

Type of policy

Meaning

Valued policy

The policy covers a specific value and pays the value in case of loss

Specific policy

The policy covers up to a specified sum insured limit. In case of a claim, lower of the sum insured or the loss suffered is paid

Floating policy

The policy covers assets at multiple locations under a single policy

Reinstatement value policy

Under this policy, the cost of reinstating the asset which is damaged in a fire or related perils is paid

Consequential loss policy

This policy pays for the loss of profit due to the interruption of activities after a fire

Comprehensive policy

This policy covers all types of loss suffered by the asset

Coverage and exclusions under fire insurance plans:

Fire insurance plans have the following coverage and exclusions –

Inclusions

Exclusions

Fire

War or nuclear contamination

Lightning

Underground fire

Riots, strikes or malicious damage

Theft after fire

Cyclone, tempest, hurricanes, etc.

Intentional damages

Flood

Pollution

Impact damage

Damage in cold storage due to power changes

Aircraft damage

Loss in earnings due to damage suffered

Rockslide or landslide

Removal of debris

Leakage from a sprinkler system

Implosion or explosion

Bush fire, etc.

A premium of fire insurance policies:

  • Nature of usage of the insured property
  • Location of the property
  • Value of the assets being insured
  • Add-on covers opted
  • Size of the property
  • Type of policy opted

Marine insurance

Marine insurance plans cover the damages incurred when goods are being transported from one place to another. These plans, therefore, are very beneficial for businesses as they allow them to avoid a financial loss in case of loss of goods in transit.

Marine insurance policies come in various types the popular of which are as follows –

Type of policy

Meaning

Cargo policy

This policy covers the goods being transported

Hull insurance

This policy covers the vessel which is transporting the goods

Freight insurance

If the vessel operator loses the freight payable on the goods which have been damaged in transit, the policy would cover such loss

Time policy

This policy provides covers a specific time period

Voyage policy

This policy covers a single voyage

Mixed policy

This policy combines time policy and voyage policy and covers trips taken between specific locations within a given period of time

Port risk policy

The policy covers any type of loss suffered by the vessel when it is anchored at a port

Block policy

This policy covers the land and sea voyages

Inclusions and exclusions of marine insurance:

The coverage benefits and exclusions in a marine insurance policy include the following –

Inclusions

Exclusions

Sinking or stranding of the ship

Deliberate loss or misconduct

Fire or explosion

Riots, war or strikes

Earthquake

Insufficient packaging of the goods

Jettison or washing overboard

Loss due to delays

Damage to the vessel due to the collision, piracy, etc.

Wear and tear of the cargo

Natural calamities

Leakage of packaged goods

Wreckage removal

Premiums of marine insurance policies:

The premiums of a marine insurance plan depend on the following factors –

  • Value and the nature of the goods that are being transported from one place to another
  • Amount of freight payable for the transportation
  • An inherent risk of the goods
  • The route of transportation
  • The type of vessel used for transportation and its value
  • A destination where the goods are being taken
  • Underlying risks of piracy, political instability, etc.
  • Possible natural calamities that would incur

Commercial insurance:

Commercial insurance plans are those which are bought by organisations to cover the different types of financial risks that they face. The most popular types of commercial insurance plans include the following –

Type of policy

Meaning

Group Mediclaim policy

A group health insurance policy taken by employers for covering their employees

Workmen’s Compensation policy

A policy designed as per the Workmen’s Compensation Act requires organisations to compensate their employees if the employees fall ill or are injured due to the nature of their employment

Commercial General Liability insurance

A policy that covers the multiple types of liabilities faced by businesses in their everyday operations

Directors and Officers insurance

A policy that covers the directors and officers of an organisation against the liability faced due to their mistakes and errors

Doctors Professional Indemnity policy

A policy that covers the liability faced by doctors due to negligence or error in their practice

Cyber insurance

A policy that covers the cyber risks faced by organisations and indemnifies them in case of cyberattacks.

How to buy insurance?

Here are the ways in which you should go about buying a suitable insurance policy for yourself from the different kinds of insurance plans–

  • Offline 

    You can buy insurance policies offline through any of the following modes –

    • By visiting the branch office of the insurance company and applying for the desired policy physically
    • By getting in touch with an insurance agent or a broker and buying the policy sold by him/her
    • By contacting an executive of the insurance company to visit you and help you buy the insurance policy 
  • Online

    The online mode is easier as it allows you to buy a suitable insurance policy conveniently, from your own home or office. Moreover, many insurance plans are issued instantly when you buy them online which helps in saving time and effort. 

    Many insurance companies, online aggregator websites and online brokers sell insurance plans online. You can choose any online marketplace and find the best policy that you want.
    You can also choose Turtlemint which offers you some of the best benefits. Turtlemint is tied up with leading insurance companies, both life and general insurers, allowing you to select the best plans available in the market. You can compare the main types of insurance plans on Turtlemint’s website and then buy the best. You can also get personalised assistance for any queries that you have during the purchase process. Turtlemint’s personalised service helps you find the best insurance plan. Just visit Turtlemint’s website at www.turtlemint.com, compare and buy the plan that you need.

Things to keep in mind when buying insurance:

Now you know how many types of insurance plans are available in the insurance segment. However, when you are choosing an insurance policy, the following things should be kept in mind –
The different forms of insurance are relevant given the different types of financial risks faced by individuals as well as businesses. So, choose suitable insurance plans based on your risks and enjoy financial security. Also, compare the available insurance policies online to find a policy that offers the best coverage benefits at the most affordable premium rates.

FAQs

  1. What are the tax benefits of insurance?

    Life insurance and health insurance plans allow tax benefits. The premium paid for life insurance policies qualifies as a deduction up to INR 1.5 lakhs under Section 80C. Premiums paid for health insurance policies or riders offered by life insurance companies qualify for deduction under Section 80D. The limit of deduction is INR 25,000 which increases to INR 50,000 for senior citizens. Buying a separate health plan for senior citizen parents and paying premiums for them would also allow an additional deduction of up to INR 50,000. Besides tax benefits on premiums, the benefits received from a life insurance policy are also completely tax-free under Section 10 (10D).

  2. What is the duration of health insurance plans?

    Health insurance plans are offered for one year. However, you can buy coverage for two or three continuous years too by paying the aggregate premium at once.

  3. What is group insurance?

    Group insurance plans are those which offer coverage to a group of individuals under a single plan. For instance, group insurance plans can be bought by the employer for their employees, banks for their account holder, etc.

  4. Can I buy a life insurance policy for my child?

    Yes, you can buy a life insurance policy for your child. In that case, the child would be the life insured and you would be the policyholder.

  5. What is the meaning of the nominee?

    A nominee is an individual who is authorised to collect the death benefit if the insured dies.

How to choose the best LIC policy to invest in India?

The Life Insurance Corporation of India was formed in the year 1956 as the sole life insurance company in India. Since then, till the year 2000, the company has enjoyed a monopoly position in the life insurance segment and has created a customer base of more than 250 million individuals. Every individual has an inherent trust in LIC’s brand name which has resulted in the company having the largest market share in the life insurance business.

LIC offers a range of life insurance policies which help in fulfilling the varied insurance needs of individuals. Among the various LIC plans issued by the company, there are some plans which are the best-selling plans as they have the most comprehensive coverage benefits. But before we dive into the best LIC policy to buy, let’s first understand the different types of LIC plans that are available:

Top LIC policy in Different Categories in India:

Among the variety of life insurance plans offered by LIC in all the above-mentioned categories, let’s discuss some of the best LIC plans that the company offers for the various types:

    • Term Insurance Plans
      Term plans are the most basic life insurance plans which cover the risk of premature death and offer financial security. The salient features of term plans are as follows –

      • High sum assured levels can be selected as premiums are very low and affordable
      • These plans usually don’t have a maturity benefit
      • There might be inbuilt riders which help in enhancing the coverage under the plan

      Term insurance helps in financially securing the policyholder’s family in case of their early death. Additionally, survival benefits might be provided by some insurers. Choosing the right term insurance policy is a crucial decision for individuals as well as their dependents, which is why comparing their features and benefits becomes a critical decision. Visit this page & enter the relevant details to help us showcase the best term insurance plans available in the market & the best available prices.

LIC’s most popular term insurance plan: LIC’s e-Term Plan:

This is an online term plan which can be bought at the click of a mouse. The plan’s USPs include the following:

      • Differential premium rates are applicable for smokers and non-smokers
      • Premium discounts help in lowering the premium charged
Name of the LIC Plan LIC’s e-Term Plan
Type of Plan Term Insurance Plan
Whom does the plan suit? Suitable for all as the plan creates financial security for the policyholder as well for his family.
Entry Age 18-60 years
Maximum Maturity Age 75 years
Policy Tenure 10-35 years
Sum Assured INR 25 lakhs onwards
Death Benefit Sum assured
Maturity Benefit NIL

      • Endowment Plans
        Endowment plans are those which provide both insurance coverage as well as savings. The features of endowment plans include the following –

        • A death benefit is paid on death during the policy term. If the plan matures, however, a maturity benefit is paid
        • The endowment plans provide guaranteed benefits
        • The bonus might be added if the plan is offered as a participating plan

LIC’s most popular endowment plan: LIC’s Jeevan Lakshya Plan

The plan is an endowment plan which has an enhanced death benefit. The USP of the plan is as follows –

      • Death benefit consists of annual incomes as well as lump sum payment on completion of the policy term
      • Two optional riders are available with the plan
      • Bonus additions help in enhancing the plan benefits
      • Attractive premium discounts lower the premium payable
Name of the LIC Plan LIC’s Jeevan Lakshya Plan
Type of Plan Endowment Plan
Whom does the plan suit? Risk-averse individuals who are looking to create savings along with insurance.
Entry Age 18-50 years
Maximum Maturity Age 65 years
Policy Tenure 13-25 years
Sum Assured INR 1 lakh onwards
Death Benefit 10% of sum assured paid as annual incomes till second last policy year
+ 110% of basic sum assured on maturity
+ Accrued bonuses
Maturity Benefit Basic sum assured + accrued bonuses

Would you like to check benefits & features offered by other Life Insurance companies? Visit Turtlemint’s endowment policy comparison page & enter the relevant details to browse through the most attractive endowment plans in the market.

    • Money-back plans
      Money-back plans are like endowment plans. However, they pay the sum assured in instalments during the policy tenure rather than in a lump sum on maturity. The features of money back plans include the following –

      • Sum assured is paid in predetermined instalments at predefined intervals during the term of the policy
      • When the policy matures, the rest of the sum assured is paid along with bonus
      • In case of death of the insured within the policy tenure, the entire sum assured is paid to the nominee irrespective of the amount of money back benefits already paid.

LIC’s most popular money-back plan: LIC Jeevan Shiromani Plan

This is a money-back plan for High Net worth Individuals as the plan offers higher levels of sum assured. The USPs include the following –

    • Loyalty additions and guaranteed additions are added to the plan benefits which enhances them
    • Money-back benefits provide easy liquidity
    • There is an inbuilt critical illness benefit which covers 15 critical illnesses.
    • Four additional riders are available for customisation
    • The maturity and death benefits can be taken in instalments
Name of the LIC Plan LIC’s Jeevan Shiromani Plan
Type of Plan Money-back plan
Whom does the plan suit? Risk-averse individuals who want to create savings with insurance and also need liquidity during the policy tenure.
Entry Age 18-55 years
Maximum Maturity Age 65-69 years depending on the policy term
Policy Tenure 14,16,18,20 years
Sum Assured INR 1 crore onwards
Death Benefit Sum Assured on death
+ Guaranteed additions + loyalty additions (if any)
Maturity Benefit 10% to 40% of the sum assured left after paying the money back benefit
+ Guaranteed additions
+ Loyalty additions

  • Unit linked insurance plans
    Unit linked insurance plans, or ULIPs are they are popularly called, are investment-oriented life insurance plans which promise market-linked returns as well as insurance coverage. Their features are as follows –

    • The premium paid is invested in market-linked investment funds chosen by the policyholder
    • There is the flexibility of switching between the available funds and partial withdrawals
    • There are different funds with different risk profiles so that investors can plan their investments according to their risk appetites
    • The returns are not guaranteed and depend on the market movements.

    ULIPs provide the benefit of investment returns along with insurance and the premium grows along with the market trends. These provide the options of different funds to the policyholder and they can choose according to their risk-capability. However, ULIPs are different from other investment options such as mutual funds and conventional life insurance policies, the best ULIP plans along with their salient features are listed here.

LIC’s most popular Unit Linked Insurance Plan: LIC’s New Endowment Plus Plan

This is the standalone unit-linked insurance plan offered by LIC which has the following salient features –

    • LIC’s Linked Accidental Death Benefit Rider can be chosen as an optional coverage benefit
    • Four funds are available for investing the premium
    • Four free switches are allowed in a policy year for changing between funds
Name of the LIC Plan LIC’s New Endowment Plus Plan
Type of Plan Unit Linked Insurance Plan
Whom does the plan suit? Suitable for risk-taking individuals who want to avail market-linked returns along with insurance
Entry Age 90 days – 50 years
Maximum Maturity Age 60 years
Policy Tenure 10-20 years
Sum Assured Higher of 10 times the annualised premium or 105% of total premiums paid
Death Benefit Higher of the available fund value or the basic sum assured
Maturity Benefit Fund value

  • Child plans
    Child plans are insurance plans which specifically cater to the financial security of a child. The plan can be issued as an endowment, money back or unit-linked plan. The salient features include the following –

    • The plan can be bought by parents of minor children
    • The parent or the child can be the life insured
    • There is an inbuilt premium waiver benefit. This benefit waives off the premium if the parent dies. The plan continues till maturity and gives the promised benefits to provide the child with the required funds

    Child plans assure a financial corpus that can be utilised in the future. There are several versions of these plans which are inflation-proof, adding to the security of the child’s future. More information on different child plans available in India and their comparison can be found here.

LIC’s most popular child plan: LIC’s Jeevan Tarun Plan

This is a child plan which pays the money back benefits between the ages 20 to 24 years of the child and when the child attains 25 years of age, the plan matures and pays the maturity benefit. The USP of the plan includes the following benefits –

    • There are four money back benefits to choose from
    • Bonuses help increase the plan benefits
    • There is an optional premium waiver benefit rider for an enhanced coverage
    • There are two types of premium rebates which help in lowering the premium amount.
Name of the LIC Plan LIC’s Jeevan Tarun Plan
Type of Plan Traditional Child Plan
Whom does the plan suit? Suitable for parents who want to create a secured corpus for their child’s future.
Entry Age 90 days – 12 years
Maximum Maturity Age 25 years
Policy Tenure 25 minus entry age
Sum Assured INR 75,000 onwards
Death Benefit Sum assured on death
+ Accrued bonuses
Maturity Benefit 25% to 100% of the sum assured depending on the survival benefit option selected

  • Pension plans
    Pension plans are retirement oriented plans which help individuals create a retirement corpus. The features of pension plans are as follows –

    • Pension plans can be offered in two variants – deferred annuity and immediate annuity plans
    • The maturity benefit of a pension plan is used to create annuities which continue till the lifetime of the policyholder
    • Under immediate annuity plans, annuities can be received on joint lives too.

One of LIC’s popular pension plans: LIC’s Jeevan Shanti Plan

This is a pension plan for senior citizens. The plan offers you the choice of choosing a deferred annuity option or an immediate annuity option. Each option further offers a range of annuity payment options which can be selected as per requirement. The USPs of the plan is as follows –

    • The annuity payment options can be availed on a single life or on a joint life basis
    • Under the deferred annuity option, monthly guaranteed additions are added to the policy corpus till the deferment period
    • The death benefit can be taken in annuity payments, in instalments or in a lump sum as selected by the annuitant
    • A policy loan is also available under some annuity options
Name of the LIC Plan LIC’s Jeevan Shanti Plan
Type of Plan Pension Plan
Whom does the plan suit? Suitable for individuals looking to create a retirement corpus as well as lifetime income after retirement.
Entry Age 60 years and above
Maximum Maturity Age Depends on the annuity option selected
Policy Tenure Depends on the annuity option selected
Sum Assured NA
Death Benefit Depends on the plan option selected.
Maturity Benefit Nil. Annuity payments are made from the vesting date till the annuitant’s lifetime.

LIC’s Jeevan Shanti plan not suiting your exact requirements for a pension plan?

Help us recommend ULIP plans based on your requirement & choose the best policy according to your needs. Simply click on this link & follow the instructions!

Top #9 Points to consider while identifying the best LIC plan:

So, these are some of the best plans offered by LIC which you can consider. You can select the plans depending on your insurance needs. Before selecting the plans, however, keep the following things in mind –

  1. Purpose

    Make sure that the plan fulfils your financial needs. If you want to fulfil the need for income replacement, a term insurance plan is a must. Similarly, if you want to plan for your retirement, choose a pension plan. So, the choice of the plan should match with your financial goals.

  2. Type of plan –

    The choice of the plan should be based on your risk appetite as well. If you don’t mind taking risks, ULIPs are a good choice. However, if you are risk-averse, choose traditional endowment and money-back plans for guaranteed returns.

  3. Sum Assured –

    The sum assured of the plan should be sufficient enough to cover the financial goal for which you are buying the policy.

  4. Policy term –

    The term of the policy should be selected depending on the need of funds. Match your investment horizon with that of the policy tenure and then select the term. For instance, if you would be needing funds after 15 years, choose a policy term of 15 years so that you get the policy benefit just when you need it.

  5. Tax benefits –

    Life insurance policies give you tax benefits. The premiums paid are allowed as a deduction under Section 80C up to INR 1.5 lakhs. Similarly, the death or maturity benefit received is also a tax-free income under Section 10 (10D). So, don’t forget to maximise the tax advantage offered by the plan that you buy.

  6. Rider benefits –

    If you want additional coverage benefits, look for optional riders offered by the plan which would help you increase the scope of coverage.

  7. Exclusions

    Almost all LIC plans have suicide exclusion wherein suicides within 12 months of policy inception or revival are not covered. In such cases, the premium paid is refunded or the surrender value is paid. So, check the exclusion of the plan before buying to know the exact coverage details.

  8. Annuity options in pension plans –

    LIC’s pension plans have multiple annuity options. If you are buying the pension plan, ensure that you choose the most suitable annuity pay-out option for earning the maximum benefits.

  9. Loyalty additions and bonuses –

    Traditional LIC plans offer you the benefit of extra additions like loyalty additions, guaranteed additions or reversionary bonuses. Look for these extra additions in the plan’s benefits structure to get a higher payout under the policy.

    So, plan your financial goals and then find the best LIC policy which best suits your financial goals. Invest in any of the above-mentioned policies and enjoy the benefits which the policy promises.

    To buy LIC’s policies you can choose Turtlemint. Turtlemint is an online platform which lets you buy the best LIC policy for your coverage requirements. The benefits of buying through Turtlemint are as follows –

    • You can simply provide your personal information and buy the policy with the click of a few buttons
    • Turtlemint also recommends you the ideal coverage level based on the income that you enter
    • You can compare similar plans on Turtlemint before you buy the actual policy. When you compare you can find the plan which has the best coverage benefits at the most reasonable premium rates.
    • Turtlemint not only helps you buy the most suitable LIC policy online, you can get help at the time of claims too. Turtlemint has a dedicated claims handling department which coordinates with the insurance company to ensure a quick claim settlement.


    So, choose the most relevant LIC policy based on your needs and buy the policy easily from Turtlemint.