Best Term Insurance Companies in India

The most important thing you’ll need to consider while buying a term plan is longevity. If you’re 30 right now and you intend to buy a term plan that lasts another 30 years, you want to make sure that your term insurance provider sticks around for the next 30 years atleast. Granted the industry is strictly regulated and bankruptcies are unheard of within this domain, but your term insurance provider could be acquired/merged with another entity in the event they want to shut shop and exit the Indian market. It would be prudent to avoid such a scenario entirely. This is why it’s important to look at a company’s track record.

You can evaluate how long they’ve been around, judge the brand equity they’ve built in these years and also assess management vision. At Ditto, our advisors were asked to evaluate a company’s track record, and here’s the list of top 5 providers according to our experts.

Conclusion: LIC has the best track record and brand equity amongst most life insurance companies considering they’ve been around longer than most people. However, they don’t feature in our top 5 list, since their term insurance products aren’t as competitive as other providers.

On the flipside, HDFC Life has a portfolio of extremely competitive term products and a really good track record to boot.

Claim Settlement Ratio is given by -

(Total number of claims settled by an insurer across a year / Total number of claims raised to the insurer across the year) x 100

This is an indication of the insurer's claim settlement track record. For a life insurance provider, Ditto’s advisors recommend a CSR of 97 and above. This should give you and your dependents enough breathing room when it comes to claim settlement.

As you can see, however, most providers have a claim settlement ratio of 99+. This is to be expected, considering death isn’t a subjective matter. Also, the regulator mandates all death claims to be processed after 3 years of buying the policy. So, the chances of rejection are very tiny as is.

Conclusion: A claim settlement ratio above 99% is ideal; anything between 97% and 99% is good and we wouldn’t recommend an insurer whose CSR is below 97% since this points to some underlying issue in their claim settlement process.

The Amount Settlement Ratio of an insurer is calculated by -

(Total amount settled as claims by an insurer over the year / Total amount of premiums collected over premiums across the insurer in the year) * 100

This metric is used to see if the insurer is discriminating between policyholders with high-value claims.

The way this works is very simple. An insurer can game their claim settlement ratio by approving 99 claims worth 1 crore and then denying 1 claim worth 10 crore. This is not an ideal scenario since their claim settlement ratio will tally up to 99%. But the one claim that they denied can be traced back to a high-value claim totalling 10 crores. This is why you measure the “amount settlement ratio” to make sure the insurer isn’t skimping on the high-value claims.

Moreover, if a company has an ASR of less than 80%, that may be a troubling sign for policyholders since you could argue that the insurance isn’t paying out a lot of money in claims. On the flipside, an ASR of greater than 100% could also be problematic since now the insurance company is paying out more money than what they are generating in new premiums.

So, ideally, an ASR between 80% and 100% could be a good option for most people.

And with the explanations out of the way, here’s a list of the best term insurance companies with an ideal Amount Settlement Ratio (ASR) -

Also read: Best Term Plans In India for 2024

While the settlement ratios give you a fair idea about the dealings of an insurance company when handling claims, it doesn’t always tell you how difficult it’s been to work with the insurance company.

For instance, imagine a scenario when the claim is settled but only after a string of complaints. This is less than ideal for individuals holding a term plan since their nominees will have to deal with these complaints in their absence. So it always makes sense to look at the complaints volume alongside the claim settlement numbers. In some ways, this also tells you about the operational efficiency of a term insurance provider.

Note, however that these numbers aren’t available on IRDAI’s website. Instead, you will have to source this data from the insurer's website. If you do not want to source these numbers yourself, here’s a look at the term insurers with some of the lowest complaint volumes in the industry -

Conclusion: The lower the complaint volume, the better the operational proficiency of the brand. Also, HDFC Life has the lowest complaint volume in the industry, making it one of the top runners in our list of term insurance providers.

It’s easy to boast good settlement numbers when dealing with a few hundred clients. However, it becomes increasingly challenging to maintain the same numbers and an acceptable level of service as the business scales in size. This is why it’s important to evaluate the annual term business (in new premiums) generated.

A large business and good settlement numbers indicate stability while a small business and erratic claim numbers can be signs of trouble. So make sure you pair the settlement numbers with the average annual business generated by a term insurance provider before you pick a policy for yourself.

Alternatively, here’s a look at the average annual business of some of the biggest term insurance providers in India -

Conclusion: As we already noted, the size of the insurer cannot be the sole deciding factor. Even small-sized brands can offer really good products at an extremely competitive price point. So it’s also important to look at the product portfolio.

Term plans are usually vanilla products that offer little variety. The product pays out a large sum of money in the event the policyholder passes away. So you may be tempted to think there isn’t a lot separating term insurance offerings from different providers. However, this is only partly true. While the base product is simple, term insurance products also offer riders–additional accompaniments that offer extra protection to policyholders and their nominees. Here’s a list of the top term insurance providers and the kind of extra benefits they extend

Conclusion: Once you have considered the 6 factors mentioned above, you can decide who is the best term insurance provider that caters to your family’s future goals and current financial bandwidth.

But if you are still confused, here’s a recommendation of the industry-best term insurance providers as noted by Ditto’s advisors. -

Best Term Insurance companies in 2024: