I often advice people not to combine insurance and investment and the only insurance product which offers such a possibility is term life insurance.
First let's try to find out what's term life insurance. Wikipedia has a very good definition for it.
In simple, term life insurance provides you only insurance and you don't get anything at the end of policy term ( on survival ). Hence those who opt for it treat insurance as a cost ( or expense ) rather than an investment.
Recently I came across this page on the personalfn website. This page lists down the premium charged by different life insurance companies in India for term life insurance. As you would notice the lowest premium is charged by SBI Life Insurance ( which is owned 74% by the State Bank of India ).
An year back, when I was evaluating Indian Life Insurance companies to purchase a term insurance plan, I had chosen SBI Life. In hindsight, that looks like an intelligent decision.
To be precise, I had bought the option under which the "Sum assured increases by 5% annually" so that the Sum assured can atleast keep pace with inflation. But after I had purchased this policy I got a shocker. The 5% increase per annum is not compounded as I had thought, but is rather caluclated as simple interest on the original sum assured. Still SBI Life Shield looks the best that is on offer presently, since no other Inusrance company offers this facility of increase in Sum assured annually.
Disclosure: I am not associated with SBI Life in any way, except for the fact that I have purchased SBI Life Shield, their term insurance plan last year. If you are aware of any other Life insurance company offering a lower premium for term insurance in India, please do comment and I will update this post accordingly.
Thursday, January 15, 2009
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Hey thanks, this post was very helpful! I was thinking of getting a term insurance. Thanks again for your post. Hope you post more and more!
ReplyDeleteI would recommend selecting the lowest cost policy from a top-rated company. Be sure to find out the ratings from A,M, Best, S&P and Moodys.
ReplyDeleteI believe SBI Life has a good standing within India ( being owned 74% by the State Bank of India ), hence buying an insurance policy can be considered safe enough.
ReplyDeletei want to buy term plan my age is 27 plz guide
ReplyDeletehi i am planing to buy sbi shied plan can u guide me which option i should take 5% annuly incr or 50% after 5 yr increase....
ReplyDeleteand also tell me if i choose any one of above mentioned option prem will remain same or not...
for any of option or its will incre when sum assured increa
plz guide me aasp and let me know ur view or suggest if any other good term plan recently avaliable
tx in advance
Hi Chinmay,
ReplyDeleteThe premium for the "50% increase in 5 years" option is more than all other options in SBI Life Shield.
I had chosen the "5% increase" option because I felt 5% increase per annum is good enough to keep pace with inflation. Also because the premium for "50% increase in 5 years" was higher, I had chosen 5% increase option.
As far as I know, SBI Life Shield is still the best term insurance plan in the market.
The premium amount increases with the increase in sum assured. You can use this premium calculator to calculate the premium based on your age and sum assured.
My researched dtermined the lowest premium for Term insurance is offered by Kotak Old Life Preferred term Policy for Non-Smokers. However when I contacted Kotak Agent they were coercing me to take a Smart Advantage Plan. Then I did not pursue.. Still looking for a Cheap term plan with no frilss
ReplyDeleteHi Anon,
ReplyDeleteI'm not sure how you decided upon Kotak Old Life Preferred term policy being the cheapest term insurance. I checked their website, their premiums are higher than SBI Life Shield. You can also use this page for comparison of premiums.
hi
ReplyDeletewhats diff between term plan and personal accidental policy
its better to take personal accidental policy of new india assur or i have to think for both pure term and personal accidental policy
which one is good ?guide me
and also in term plan its advisable to include critical illness rider
i want to buy 5 lakh term insu and personal accident policy plz suggest me good compnany
ReplyDeleteHi Chinmay,
ReplyDeleteAs I am not aware of your age, I won't be able to give you exact advice on this. But I will suggest that you go for SBI Life Shield term insurance plan which comes along with an accidental death and permanent disability rider. Thus your need of having both life & accident insurance can be satisfied by a single policy. Do read my disclaimer and consult an insurance advisor before buying any insurance.
Very nice blog with good information.
ReplyDelete