Best Term Insurance Companies in India
Quick Take: Here is a list of the top term insurance companies in India for the year 2024 as rated by Ditto’s advisors. The list takes into account factors such as scale, size of operations, brand equity, claim settlement ratio, amount settlement ratio, complaints volume and track record.
Top Health Insurance Companies in India 2024
Company | CLAIM SETTLEMENT RATIO (2020 - 2023) | Amount Settlement Ratio (2019 - 2022) | Complaints volume (2020 - 2023) | Annual Business (2020 - 2023) | Track Record | Rating (out of 10) |
---|---|---|---|---|---|---|
Max Life | 99.5% | 95.5% | 7.3 | ₹9,296 cr. | 24 years | 8.5 |
TATA AIA | 98.9% | 92.7% | 3 | ₹7,599 cr. | 23 years | 8 |
Bajaj Allianz Life | 99.11% | 93% | 4.4 | ₹10,456 cr. | 23 years | 7.8 |
ICICI Prudential | 97.52% | 92.1% | 14.3 | ₹17,198 cr. | 24 years | 7.8 |
HDFC Life | 99.2% | 87.3% | 2 | ₹27,490 cr. | 24 years | 6.8 |
Industry | 97.74% | 90.9% | 72.8 | ₹14,204 cr. | - | - |
(P.S.: The data compiled here is averaged over a three-year period to avoid single-year bias) |
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India has 24 life insurance companies. This includes one public sector company - LIC - majorly owned by the government, one quasi-government-owned life insurance i.e. SBI Life and 22 private life insurance companies.
However, not all life insurance companies are built the same way. Some companies have a dedicated focus on selling term insurance plans. These providers offer substantial variety within their product offerings but also actively market their term plans. On the flip side, life insurance companies like LIC don’t actively market their term plans due to the fact they have a massive portfolio of savings products (otherwise called endowment plans or ULIPs).
In this article, however, we will only focus on ranking insurance companies that have a dedicated focus on selling term plans.
What is the Difference Between Term Insurance Companies and Life Insurance Companies?
In principle, all life insurance companies are also term insurance companies, since all 24 life insurance providers market atleast a single-term plan. These are plans that pay out a large lump sum to the nominees upon the death of the policyholder. However, most insurance plans sold in India are what you call “savings products”. They offer death protection (By paying out a lump sum to the nominees just as term plans do) but also offer investment benefits by acting as a savings product. These “dual-purpose” savings plans are usually categorized as “Life Insurance Plans”. These plans include Whole Life Insurance Plans, Pension Plans, Endowment Life Insurance, Money-Back Plans, Child Insurance Plans, Unit-Linked Insurance Plans (ULIPs), and, of course, term insurance policies. LIC popularized the word and it stuck.
So in summary, all life insurance companies inherently are also term insurance companies. However, as we already noted, for this article, we will consider term insurance companies as those who have a dedicated focus on selling term plans.
The next thing we will have to do is decide what metrics we will use to measure the performance of different term insurance companies.
How to Compare Term Insurance Companies?
To compare different insurance companies, we look at a company’s track record, claim settlement ratio, amount settlement ratio, complaint volume, annual business and product portfolio. We will also try and average the numbers across 3 years wherever possible. This will help us avoid single-year bias, where a company could outperform its peers briefly and then regress afterwards.
So let’s look at the first metric
Track Record:
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.
Term Insurers with the best track record | Year of Establishment | Brand Equity | Type of Company |
---|---|---|---|
LIC | 1956 | Very High | Publicly Listed Company |
HDFC Life | 2000 | High | Private Company |
TATA AIA | 2001 | High | Private Company |
ICICI Prudential | 2000 | High | Private Company |
Max Life | 2000 | Medium | Private Company |
Bajaj Allianz | 2001 | Medium | Private Company |
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 (CSR)
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.
Best Term Insurers in India for 2024 | Claim Settlement Ratio (2020 - 2023) |
---|---|
Max Life | 99.5% |
TATA AIA | 98.9% |
Bajaj Allianz Life | 99.11% |
ICICI Prudential | 97.52% |
HDFC Life | 99.2% |
Industry | 97.74% |
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.
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Amount Settlement Ratio (ASR)
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) -
Best Term Insurers in India for 2024 | Amount Settlement Ratio (2019 - 2022) |
---|---|
Max Life | 95.5% |
TATA AIA | 92.7% |
Bajaj Allianz Life | 93% |
ICICI Prudential | 92.1% |
HDFC Life | 87.3% |
Industry | 90.9% |
Also read: Best Term Plans In India for 2024
Complaint Volume (or Operational Proficiency):
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 -
Best Term Insurers in India for 2024 | Complaint Volume / 10,000 claims (2020 - 2023) |
---|---|
Max Life | 7.3 |
TATA AIA | 3 |
Bajaj Allianz Life | 4.4 |
ICICI Prudential | 14.3 |
HDFC Life | 2 |
Industry | 72.8 |
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.
Average Annual Business
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 -
Best Term Insurers in India for 2024 | ANNUAL BUSINESS (2020 - 2023) |
---|---|
Max Life | ₹9,296 cr. |
TATA AIA | ₹7,599 cr. |
Bajaj Allianz Life | ₹10,456 cr. |
ICICI Prudential | ₹17,198 cr. |
HDFC Life | ₹27,490 cr. |
Industry | ₹14,204 cr. |
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.
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
Best Term Insurers in India for 2024 | Best Term Insurance Plan | Pros | Cons |
---|---|---|---|
Max Life | Max Life Smart Secure Plus |
| None |
TATA AIA | Tata AIA Sampoorna Raksha Supreme |
| None |
ICICI Prudential | ICICI Prudential iProtect Smart |
| Fewer options across its Critical Illness Rider benefit |
Bajaj Allianz Life | Bajaj Allianz Life Smart Protect Goal |
| No Waiver of Premium, Inflation Shield, Accidental Death Benefit, Terminal Illness Benefit, or option to boost cover amount. |
HDFC Life | HDFC Life Click2Protect Super |
| Expensive as compared to other plans in its category |
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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:
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List of Term Insurance Companies in India
Aditya Birla Sun Life
Aditya Birla Sun Life is a joint venture between Aditya Birla Capital and Canada based Sun Life Financial Inc. The company was founded in 2000 and has been one of the most popular life insurers in the country offering protection plans, child savings plans, income plans and ULIPs.
HDFC Life
Founded in 2000, HDFC Life is a leading life insurance company having a country-wide presence with 390 branches. In fact, coming from a solid lineage of the biggest private bank, today HDFC Life has become the 3rd largest private life insurer in the country. Its product offerings span across term insurance, savings plan, unit-linked plan, and also group.
Kotak Life
Founded in 2001, Kotak Life Insurance has become the fifth largest private insurer in the country in terms of total business. Its product offering ranges from pure protection plans like term plans to endowment plans like savings, investment and retirement plans.
Max Life
Founded in 2000, Max Life is a joint venture between Max Financial Services and Axis Bank. Belonging to Max Group, a well renowned conglomerate, Max Life today has become one of the top private life insurers offering a wide range of plans like term plans, savings plan, market-linked plans and many more.
Reliance Nippon Life
Erstwhile Reliance Life Insurance which was originally founded in 2001 recently became a partnership between Reliance Capital and Japan based Nippon Life Insurance in 2019. A leading private life insurer, the company offers individual and group term plans, savings and retirement plans and ULIP plans
TATA AIA
A joint venture between the owner of India’s biggest conglomerate, Tata Sons and largest life insurer in Asia-Pacific AIA Group, TATA AIA Life Insurance has grown to become one of the leading private life insurers in the country offering all types of products like protection, savings, ULIPs and many more
Bajaj Allianz Life
Bajaj Allianz is a joint venture between two notable entities, Bajaj Finserv, a major NBFC in India and Allianz SE, one of the largest financial services companies in the world. The company provides a diverse range of life insurance products like term plans, ULIPs, savings plans and retirement plans.
ICICI Prudential
ICICI Prudential Life Insurance is a joint venture between ICICI Bank and Prudential Plc., a major financial services company based in the UK. Since its commencement in 2000, ICICI Prudential has grown so immensely that today it is the second largest private life insurance company in India.
LIC-Life Insurance Corporation of India
The Life Insurance Corporation of India (LIC) is the country’s largest public-sector life insurance company, established in 1956. The company is one of the most popular life insurers in the market, offering a wide range of financial products, including - endowment plans, term policies, ULIPs, whole-life policies, pension plans, and more.
PNB MetLife
Founded in 2001, PNB Metlife is a joint venture between Punjab National Bank, MetLife International Holdings, M. Pallonji and Company Private Limited and Jammu & Kashmir Bank Limited. Its product offering spans across life insurance solutions for Child Education, Family Protection, Long Term Saving and Retirement plans
SBI Life
SBI Life is a joint venture between the State Bank of India (SBI) and French financial institution BNP Paribas Cardif that commenced operation in 2000. This Indian life insurance company gained widespread popularity owing to its trusted brand name and the diversity across its offerings of multiple life insurance products (like protection plans, saving plans, child plans, retirement plans, money-back plans, endowment and ULIPS) that cater to its vast client pool.
FAQs about Term Insurance Companies:
1. How many Term Insurance companies are there in India?
There are 24 life insurance companies in India as of 2024.
2. Which are the best Term Insurance companies based on Claim Settlement Ratio (CSR)?
The higher a term insurance provider's Claim Settlement Ratio (CSR), the better its credibility. If you are looking for a solid term insurer, go ahead with a brand with a CSR of 97 or above and below 100.
Based on that, here’s a list of the best Term Insurance companies based on its Claim Settlement Ratio (CSR) -
Best Term Insurers in India for 2024 | Claim Settlement Ratio (2020 - 2023) |
---|---|
Max Life | 99.5% |
TATA AIA | 98.9% |
Bajaj Allianz Life | 99.11% |
ICICI Prudential | 97.52% |
HDFC Life | 99.2% |
Industry | 97.74% |
3. What are the eligibility criteria for availing of a term insurance plan?
Insurers have very stringent eligibility criteria for term insurance plans. This can be attributed to the insurers' underwriting teams, which try to defend their financial stability by offering high coverage against pocket-friendly premiums.
So, if you are planning to apply for a term insurance policy, here’s all that you need to know about the eligibility criteria -
a. Education, occupation, and income
Age | Multiplier | Income-based maximum cover (income = ₹10 lakhs/year) |
---|---|---|
18 - 35 years | 25 | ₹10 lakhs * 25 |
36 - 40 years | 20 | ₹10 lakhs * 20 |
41 - 45 years | 15 | ₹10 lakhs * 15 |
46 - 50 years | 12 | ₹10 lakhs * 12 |
51 - 55 years | 10 | ₹10 lakhs * 10 |
56 - 65 years | 5 | ₹10 lakhs * 5 |
QUALIFICATION FACTORS/ ELIGIBILITY CRITERIA | TERM INSURANCE ELIGIBILITY | ||
---|---|---|---|
EDUCATION | INCOME | SALARIED/NON-SALARIED | |
Below Class 10 | - | - | Not eligible |
Class 10 passed | ₹10 lakh or above | Salaried | Max Life |
Class 10 passed | ₹10 lakh or above | Non-Salaried | HDFC Life and Max Life |
Class 12 passed | ₹5 lakh or above | Salaried and Non-Salaried | HDFC Life and Max Life |
Diploma | ₹5 lakh or above | Salaried and Non-Salaried | HDFC Life and Max Life |
Graduate | - | - | All insurers offer |
Post Graduate | - | - | All insurers offer |
b. Medical history
c. Habits and lifestyle
4. When should I apply for a term insurance plan?
Term insurance policies have a unique perk - the premiums are locked in as per your purchase age. Now, since when you are young, the chances of having acquired a pre-existing medical condition are pretty low, you are looking at much lower premiums. This premium will get fixed for all across your policy tenure. Insurers are pretty willing to offer such affordable premiums because you present lower risks of payouts.
So, we recommend you opt for a term insurance policy as soon as possible!
5. What is the ideal term insurance tenure?
A few factors decide the ideal term insurance tenure -
a. Years until your retirement
b. Number and age of dependents
Remember, for term insurance plans, one size doesn’t fit all. It varies based on a couple of factors mentioned above.
6. What is the ideal term insurance cover?
The ideal term insurance cover varies from one family to the other since it’s based on a few deciding elements -
- Your age
- You smoking habits
- Number and age of dependents
- Policy tenure
- Monthly expenses
- Current financial liabilities
- Inflation rate
You can always use a free calculator to compute the ideal term insurance coverage.