Saturday, March 19, 2011

Term plans for topping up sum assured

With the arrival of a new dependent, i recently reviewed my insurance portfolio and realized that i needed to enhance my life cover. I knew that a lot of new products (especially that available online) has been introduced in last one year. I tried getting an online quote from 3 private insurance providers - ICICI Prudential, AEGON Religare and MetLife.

For my profile, the quotes are as given below:
  • Age: 34
  • Policy Duration: 25 years
  • Sum Assured: 50 lakhs
  1. ICICI Prudential (iProtect) - Rs. 7,000
  2. AEGON Religare (iTerm) - Rs. 7,050
  3. MetLife (Met Protect) - Rs. 7,200
* Premiums are exclusive of service tax and cesses.

But taking insurance from private companies is always a risky proposition. What if they don’t stand by you (dependents, in fact) in need of the hour! I decided to check LIC's offering. For a sum assured of 50 lakhs they had a product (only one) called Amulya Jeevan (Product Number: 190). I got the shock of my life when i checked the premium rates. For my age and profile the premium for Amulya Jeevan is a staggering amount - Rs. 18,600 per year. That’s more than double the premium offered by private insurers!! I understand that each insurer needs to protect their profitability and perform (financially) on a consistent basis. If private insurers can keep their premium so low, why can’t LIC too? Or is it that they are passing on their inefficiencies (and hence the cost) to end customers??

What on earth is wrong with LIC? I know for a fact that they don't promote term plans. In fact, i have had the experience of being laughed at by an insurance agent, when i asked her for a quote for LIC's term plan. But as a responsible, government run, insurance provider, are they not supposed keep the interest of general public in mind? As much as i know, they are minting money by riding on the government support and taking customers for a ride. It’s high time that someone raised their voice and say that LIC is not doing its job!! Don't they have a commitment towards the "aam aadmi"? Rather than promoting ULIPs and money back policies, LIC (and its agents) should be educating the general public about the importance of adequate life insurance.

As for myself, i think i would go for ICICI Prudential's iTerm policy. In comparison to others i believe they are more reputed and safer (irrespective of their bad name). As long as I provide accurate details while taking the policy, i am assuming that there won’t be any problem.

Have you taken insurance? I would love to hear from you on your personal experience - please feel free to leave your comments.

Disclaimer: The views posted in this blog are my own and are based purely on my own way of assessments. Readers are requested to consult with their financial/ insurance advisers before making any investment/ insurance decision, do their own due diligence and validate factual information. 


Asif said...

Before buying that i wud suggest to check the review comments from other users in lot many bad experience for iprotect!

Ganesh said...

I follow Manish and Jago Investor. If you go for the private players, its always risky. I agree. But out of the lot i think ICICI is better. What's your opinion?

Sneha said...

iProtect I am not very sure, but in my experience, I have found ICICI is far better and prompt than many other private players.. I cant recollect the name of the policy , I think it was LifeInsurance II - a ULIP plan. I closed it recently and they were very prompt in dealing with it.

Ganesh said...

iProtect is completely online. A friend of mine took it recently and his experience was good. Our friendly neighborhood LIC policy is having more than double the premium. Their settlement ratios are better, but with better regulations these days, i think even the private players are okay now.

Life Insurance Corporation (LIC) Chandigarh, India said...

LIC or the Life insurance Corporation of India is an entirely government owned entity and enjoys the position of being India's largest insurance company apart from being nation's biggest investor. LIC was incorporated in 1956 and has been functioning pretty consistently.