The dark truth of term insurance. Mistake Done in Term Insurance Plan – Best Term Insurance Plan In India. In this article, we will talk about some important term-insurance-related facts that are very important for you to know.
We had made a best-term insurance plan article, Many of them were from some agents, and they tried to misguide people. After that, you might be having a a lot of confusion in your mind. Today, firstly, we will understand what the basic reason for term insurance is. And if you make an error in understanding the basics, there is a dark truth behind this term insurance. and we need to understand the real truth and understand the matter in deep. So, we are going to discuss that. After that, we will discuss some plans which are highly recommended by people, But we have to stay away from such plans. I am clearly going to mention names and the company’s name and I am going to put up my opinion about which plans to stay away from. Finally, we will conclude how important is the best term plan article that we made. After considering all the criteria we had made that video and explained what are the best term plans.
let’s start with today’s important discussion, It is going to be very important and I recommend you to share it with friends. As you share, other people are also going to gain some literacy in this matter. and we will understand a few important points.
So let’s get started. We all know, term insurance is the cheapest insurance in the world. Term Insurance actually benefits you when after your passing away, your family needs support. Your family requires money for support. The premium of a term insurance plan is any-which-way quite less. But, to save some amount out of the premium, we get stuck with some companies in which a lot of criteria are missing. So,
first of all, let’s talk about the criteria that we should consider before buying term insurance. The most important criteria is how good is their claim settlement ratio. Meaning if a company is getting 100 claims to settle, meaning 100 such people who bought the term insurance from the company, After the person’s death, when it was the company’s turn to pay back the family, So how many of those 100 people got their claims settled by the company. That is the Claim Settlement Ratio. which is important to consider. Because term insurance is only beneficial when in your absence, your family gets the support they need.
In a lure to get less costly term insurance, our families often end up suffering because we made this big financial blunder. So, the first important point is what is their claim settlement ratio.
The second important point is, what is the claim settlement amount ratio.
Suppose, some companies’ claim settlement ratio is 99%, It is also important to check how much amount of the claim did they settle. Many times, claims of small amounts do get passed by the companies, But big claims get rejected. So their claim settlement ratio is good but the claim settlement amount ratio is poor. So we need to check if the company is getting a claim of Rs 10 Crore, Out of those 10 Crores, how much claim has been passed by the company? So, it is important to consider the claim settlement amount ratio too. Many times we miss the second most important point here.
The third important point is to consider the rejection ratio.
Sometimes we fail to see the rejection ratio. So what is the rejection ratio? It means If a company gets a claim and, for whatsoever reason, the company denies the claim. If a term insurance plan has a rejection ratio of more than 1%, more than 1%, we will reject that plan outrightly. Also, we would know about some companies whose rejection ratio is up to 3.5%, but their premium is less, and because of that, we end up buying their plans. We will discuss that in the next section. But before that, let us know the fourth important point. Till now we have discussed 3 important points, claim ratio, claim amount ratio and rejection ratio. And now, the fourth important point is the rider.
Please pay attention, all the accidental rider and critical illness riders should be with the term insurance. Because term insurance premium is always fixed. And usually, we buy term insurance at a young age and the premium amount is also less. Since term insurance premium is fixed, we should put the riders with the term insurance. Rather choosing this rider with the health insurance. It is important to buy health insurance. I am going to link the best health insurance video in the description and i-button. You have largely appreciated that video. Buying the best health insurance is very important. But on the rider part, be it accidental or critical illness, we should choose it with term insurance. Because term insurance premium is fixed But health insurance premium keeps on increasing with your age. Now let’s move on to the next section.
I hope you will keep these four points in mind before buying a term insurance And do not fall for the trap of a cheap term insurance plan. Let me cite some examples for you. On our best term insurance video, you gave us lots of appreciation and support. It was shared and liked a lot by you people. Like and share this video as well. In the previous video, the main query was I have given you the helpline number for the health insurance and term insurance central office. I will mention that helpline number in the description box. In our last videos, you had posted some queries. One of the main queries was that the Bajaj Alliance term insurance is the cheapest. Bajaj Alliance insurance is upto 20% cheaper than HDFC, LIC and Tata.
Then why did you not suggest the bajaj alliance insurance?
So, the first point is that Bajaj Alliance’s claim rejection ratio is 3.49% in 2018-19. As per IRDA, which is a certified organization, and monitors insurance companies in India. Around 3.5% of claim rejection ratio is a big ratio. Moreover, 8.71% is their claim amount rejection ratio. Meaning if 100 claims are made, then, amount wise rejection ratio becomes 8.71% So the claim rejection ratio of Bajaj Alliance is very high. Maybe because it is inexpensive, you may choose Bajaj Alliance today, But if at the time of need, your claim ceases to get through. If the claim only doesn’t get passed, buying Bajaj Alliance insurance makes no point. HDFC, on the other hand, is always on number 1 or number 2 of our list because its claim rejection ratio was 0.5%. So, we should avoid buying the Bajaj Alliance plan. Your second query was related to Kotak Insurance.
Why should we not buy Kotak insurance/term plan?
How are HDFC, LIC and Tata term plans better than Kotak term plan. Let us understand that now. Kotak is not there in the top 3 of our list because Kotak’s claim rejection ratio is 2.21% Similarly for a lot of other companies. Maximum number of queries were there for three companies, Kotak, Bajaj Alliance and the third one was Max. We will cover Max also in some time. But for these two the claim rejection ratio is very high. If we talk about Max, again, its claim rejection ratio is 1.25% More than that, Max is now getting support from the Axis Bank. That is how Max is surviving as of now. Sometime back, Max was going for a tie-up with HDFC. So I had doubts about the stability of Max. Before, Max was tieing up with HDFC, but it was cancelled. Now it has tied up with Axis Bank. More than that, its claim rejection ratio is more than 1.25% 1.25% means they upfront reject the claims. And as per our rules, the top-three term insurance plan, all had a claim rejection ratio of less than 1%.
Hence I say if you haven’t seen “the best term insurance” video, I have discussed every point in detail and have clearly told you why these plans are the top three. I hope after watching this video, your basic doubts would get cleared even better. And you would bear in mind that you should not go for cheap insurance plans. I am ranking the term insurance plans again, Number one is HDFC. Since HDFC’s insurance premium is less as compared to LIC. Number two were LIC and TATA.
LIC currently because of the corona pandemic they have delayed their claims, So, you may buy either HDFC or TATA. Both of them are good. Even if LIC starts giving away timely claims, All three of them have the best term insurance plans in India. All three of them should be on your suggestion list.
The final decision would be yours. I have told you all the pointers. Told you all the Ifs and buts of the case. The final decision is yours to take. Now before that I end the video, I have one important point to tell you. That you must always remember before buying a term insurance plan. Before understanding that important point of term insurance, if you want any services from our end, Be it related to term insurance, health insurance, mutual funds, financial planning, All the helpline numbers are given in the description. Term insurance-related helpline numbers will directly connect you to the head office So you can directly connect with them. Also, if you haven’t yet opened your DMAT account, be it Zerodha, LISB or Angel, the link is in the description. Also, if you want to be a part of our special DMAT account group, You will find all the details in the description.
It is a private group only for those who open their DMAT accounts through our links. Now let us know an important point that you need to know before buying term insurance. Always buy term insurance for the earning member only. Many times while you are buying term insurance, you think of buying for your wife and a few others too. Term insurance or any insurance for that matter, should be bought only for the earning member of the family. the meaning or benefit of insurance is only when if our earning member passes off, if we are getting financially impacted, we can cover the losses through insurance. So, only buy term insurance for the earning member.
Make sure you don’t get over-insured or buy insurance for non-earning members. I hope you would remember this last tip and would like this video. If you like it, share it with your friends. Don’t leave without subscribing to our channel and press the bell icon. Your complete financial planning related doubts will get resolved on our channel. Be it Mutual Funds or shares, Anant ka funda daily series or insurance and options. Everything related to investment, you will find on this channel. Don’t leave without subscribing to our channel. We will meet in the next video. Till then, Happy Investing and do read this article again before buying insurance. I will see you very soon.
