Summer internship project

On

Comparison between Terms Plan of

Various Life Insurance Company

At

By

Hardik Babel

(201304100710059)

Torin Wealth Management

Torin Wealth Management, a Successful & leader in Financial Services provider for over one

decade. It has become synonymous name with Reliability & Trust for their customers pan India.

Torin Wealth Management, has evolved itself from mere Equity Broking business to a fully fledged

Financial Service Provider through its continues process of obtaining different certificates and tie -

ups.

Milestones

BSE Certification

NSE Certification

AMFI

IC - 33

IC – 34

Branches of Torin;

Torin Wealth Management has its branches at following locations:

Surat

Mumbai

Pune

Ahmedabad

Jamnagar

Rajkot

What Torin Wealth Management Do?

We work with you and your family to understand, manage and simplify your entire financial life.

We create wealth management strategies that allow you to meet your current needs; help you

prioritize and achieve your goals throughout your lifetime; and protect your wishes and legacy into

the future

As a financial advisory firm, Torin Wealth Management puts your interests first. We do not sell our

own products and are compensated only by our clients. This ensures that your investment strategy is

based on your goals and not on commissions. Torin investment plan reflects your risk tolerance and

your financial needs. We focus on investment selection, monitoring and oversight; asset allocation;

and tax-aware investing strategies amongst various financial aspects like Equity, currency,

commodity, Mutual Fund, Life & Non Life Insurance, Bonds, Fixed Deposits, Loans, etc

You get much more than investment advice. You get true advocates for your life, your wealth and

your legacy.

Four Core T’s of Torin Wealth Management

TEAM

• Team of experts with the wide experience of Industry of more than a decade.

• In house Product Team with the experience of more than 30 years who identifies the best product

from the market based on Price, Service & Unique Features .

• In house Certified Financial Planners (CFPs ) – Professionals with specialized skills &

knowledge to help you to evaluate your Financial Goals.

• Team of trainers with the holistic insights with the experience of more than 15 years.

TECHNOLOGY

Website of TWM is a successful result of the continues efforts of expertise from more than 3

years.

State of the art platform for online Comparison across the Insurance products.

Full Online & Mobile based Accessibility

TRAINING

TWM has a team of professional trainers with the wide experience of industry.

Torin keeps on giving training to its Business Associates to help them to walk with the changing

scenario of market.

Team

Technology

Training

Totality

TOTALITY

Torin give its customer the total solution of all your financial needs whether it is

It provides:

Equity

Commodity

Currency

Mutual Funds

Life Insurance

Non – Life Insurance

Fixed Deposits

Bonds

1.1 BRIEF HISTORY OF INSURANCE

The Indian life insurance industry has its own origin and history, since its inception. It has passed

through many obstacles, hindrances to attain the present status. Insurance owes its existence to 17th

century England. In fact, it took shape in 1688 at a rather interesting place called Lloyd's Coffee

House in London, where merchants, ship-owners and underwriters met to discuss and transact

business. The first stock companies to get into the business of insurance were chartered in England

in 1720. The year 1735 saw the birth of the first insurance company in the American colonies in

Charleston. In 1759, the Presbyterian Synod of Philadelphia sponsored the first life insurance

corporation in America for the benefit of ministers and their dependents.

Life insurance in its modern form came to India from England in 1818 with the formation of

Oriental Life Insurance Company (OLIC) in Kolkata mainly by Europeans to help widows of their

kin. Later, due to persuasion by one of its directors (Shri Babu Muttyal Seal), Indians were also

covered by the company. However, it was after 1840 that life insurance really took off in a big way.

By1868, 285 companies were doing business of insurance in India. Earlier these companies were

governed by Indian company Act 1866.

By 1870, 174 companies ceased to exist, when British Parliament enacted Insurance Act 1870.

These companies however, insured European lives. Those Indians who were offered insurance

cover were treated as sub-standard lives and were accepted with an extra premium of 15% to 20%.

By the end of the 18th century, Lloyd's had brewed enough business to become one of the first

modern insurance companies.

1.2 MEANING AND CONCEPT OF INSURANCE

Life is a roller coaster ride and is full of twists and turns. Insurance policies are a safeguard against

the uncertainties of life. As in all insurance, the insured transfers a risk to the insurer, receiving a

policy and paying a premium in exchange. The risk assumed by the insurer is the risk of death of

the insured in case of life insurance.

Insurance policies cover the risk of life as well as other assets and valuables such as home,

automobiles, jewellery etc. On the basis of the risk they cover, insurance policies can be classified

into two categories

(a) Life Insurance

(b) General Insurance

Life insurance products cover risk for the insurer against eventualities like death or disability. Non-

life insurance products cover risks against natural calamities, burglary, etc.

According to the U.S. Life Office Management Inc., “Life Insurance provides a sum of money if the

person who is insured dies whilst the policy is in effect.”

The definition of insurance can be seen from two view points:

(a) Functional Definition

(b) Contractual Definition

(a) Functional Definition

Insurance is a co-operative device of distributing losses, falling on an individual or his family over

large number of persons each bearing a nominal expenditure and feeling secure against heavy loss.

(b) Contractual Definition

Insurance may be defined as a contract consisting of one party (the insurer) who agrees to pay to

other party (the insured) or his beneficiary, a certain sum upon a given contingency against which

insurance is sought.

The functions of Insurance can be bifurcated into two parts:

(a) Primary Functions

(b) Secondary Functions

(a)Primary Functions

The primary functions of insurance include the following:

Provide Protection

The primary function of insurance is to provide protection against future risk, accidents and

uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for losses

of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.

Assessment of risk

Insurance determines the probable volume of risk by evaluating various factors that give rise to risk.

Risk is the basis for determining the premium rate also.

Collective bearing of risk

Insurance is a device to share the financial loss of few among many others. Insurance is a mean by

which few losses are shared among larger number of people. All the insured contribute premiums

towards a fund, out of which the persons exposed to a particular risk are paid.

Savings and investment

Insurance serves as a tool for savings and investment, insurance is a compulsory way of savings and

it restricts the unnecessary expenses by the insured. For the purpose of availing income-tax

exemptions, people invest in insurance also.

(b) Secondary Functions

The secondary functions of insurance include the following:

Prevention of Losses

Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate

consequences of risk by observing safety instructions; installation of automatic sparkler or alarm

systems, etc. Reduced rate of premiums stimulate more business and better protection to the

insured.

Small capital to cover large risks

Insurance relieves the businessmen from security investments, by paying small amount of premium

against larger risks and uncertainty.+64

Contributes towards the development of large industries

Insurance provides development opportunity to large industries having more risks. Even the

financial institutions may be prepared to give credit to sick industrial units which have insured their

assets including plant and machinery.

Source of Earning Foreign Exchange

Insurance is an international business. The country can earn foreign exchange by way of issue of

insurance policies.

Risk Free Trade

Insurance promotes exports insurance, which makes the foreign trade risk free with the help of

different types of policies under marine insurance cover.

1.3 Importance of Insurance Importance of Insurance for an individual:

Insurance provides Security and Safety

Insurance protects Mortgaged Property

Insurance eliminates dependency

Life Insurance encourages saving

Importance of Insurance for Business:

Uncertainty of business losses is reduced

Business-efficiency is increased with insurance

Key Man Indemnification

Enhancement of Credit

Welfare of Employees

1.4 Principles of Insurance

1.5 Types of Insurance:

Mainly there are two types of Insurance

1) Life Insurance

The main products of life insurance include:

Whole life

Endowment

Term

Investment-linked

Life annuity plan

Medical and health

2) General Insurance

Main products of General Insurance are:

Motor Insurance

Personal Accident

Fire Insurance

Medical and Health Insurance

House Insurance

1.5 Types of Life Insurance Policy Term Life Insurance Policy

As its name implies, term life insurance policy is for a specified period. It depends on the length of

time. It has one of the lowest premiums among insurance plans and also carries an added advantage

of fixed payments that do not increase during the term of the policy. In case of the policy holder's

untimely demise, the benefit amount specified in the insurance agreement goes to the nominees.

Whole Life Insurance Policy

Whole life insurance policies do not have any fixed term or end date and is only payable to the

designated beneficiary after the death of the policy holder. The policy owner does not get any

monetary benefits out of this policy. Because this type of insurance involves fixed known annual

premiums, it's a good option to ensure guaranteed financial benefits for surviving family members.

Money Back Plan

With a money back plan, policyholder receives periodic payments, which are a percentage of the

entire amount insured, during the lifetime of policy. It's a plan that offers insurance coverage along

with savings. These policies provide for periodic payments of partial survival benefits during the

term of the policy itself. A unique feature associated with this type of policies is that in the event of

death of the insured during the policy term, the designated beneficiary will get the full sum assured

without deducting any of the survival benefit amounts, which have already been paid as money-

back components. Moreover, the bonus on such policies is also calculated on the full sum assured.

Pension Plan

Pension plans are different from other types of life insurance because they do not provide any life

insurance cover, but ensure a guaranteed income, either for life or for a certain period. The

Policyholder makes the investment for a pension plan either with a single lump sum payment or

through instalments paid over a certain number of years. In return, he gets a specific sum every

year, every half-year or every month, either for life or for a fixed number of years. In case of the

death of the insured, or after the fixed annuity period expires for annuity payments, the invested

annuity fund is refunded, usually with some additional amounts as per the terms of the policy.

Endowment Policy

It is the most popular life insurance plan. This policy combines risk cover with objective of savings

and investment. If the policy holder dies during the policy period, he will get the assured amount.

Even if he survives he will receive the assured amount. The advantage of this policy is if the policy

holder survives after the completion of policy tenure, he receives assured amount plus additional

benefits like bonus from the insurance company. Designed primarily to provide a living benefit,

along with life insurance protection, the endowment policy makes a good investment if policyholder

wants coverage, as well as some extra money.

Unit-linked insurance plan (ULIP)

Unit-linked insurance plans gives a policyholder greater control on where premium can be

invested. The annual premium is invested in various types of funds that invest in debt and

equity in a proportion that suits all types of investors. A policyholder can switch from one

fund plan to another freely and can also monitor the performance of his plan easily. ULIP is

suitable for those who understand the stock market well.

1.6 Comparison of Term plans of different Companies

Term insurance policies are very popular now a day. Premium rates of such policies are very low,

companies are advertising term plans in a big way. Financial planner always advice that term plan is

best for insurance, as it covers high risk at low price. Premium of term plan is lowest compare to

ULIP, endowment or money back plan. Term plan policy is purely for risk cover.

There are many term insurance plans in India, but all of them have different features and premium

rates which confuses a prospective customer to choose the best term plan. The following table

shows the comparison of Term Plans of Different Life Insurance Companies.

Important Features of various term plan:-

AEGON i Term:-

Pure Term insurance plan with an inbuilt terminal illness cover

Option of 3 riders – accidental death benefit, waiver of premium and women critical illness

Longer policy term – up to the age of 75 years

Completely online process

Bharti AXA Life eProtect :-

This plan has only Death Benefit and no Maturity Benefit

The minimum Sum Assured is Rs 25 lacs

This plan has the Family Care Benefit option, where a cheque of Rs 1 lac is paid immediately

within 48 hours of claim submission to take care of immediate expenses before verification

 HDFC Click 2 Protect:-

Click 2 Protect is a pure protection plan which pays benefit only on the death of policy holder

Special premium rates for non-tobacco users

Can be purchased online without any agent intervention and at a low premiums

Future Generali Smart Life:-

Standard rates for smoker and non-smokers

No medical test required up to age of 45 for sum assured up to Rs.30 lacs

Provides large sum assured rebates

Available only online

Edelweiss Tokio Life- Protection:-

Large Sum Assured rebate is available

Limited Premium paying Options available

Discount for non-smokers for a sum assured of Rs 25 lacs and more

Metlife Met Protect Plan:-

Its a purely online plan which can be purchased and managed online

Low cost pure term plan for high sum assured

Non-smoker and women discount available

Kotak e-Preferred Term Plan:-

It is a pure Term Insurance Policy can be purchased online without any agent intervention.

Option to move to other non-term plans of Kotak Life Insurance.

Option to Step Up the life cover on any event without any medical underwriting with an

additional premium.

On Marriage- 50% of the Sum Assured can be increased.

House Purchase- 50% of the Sum Assured can be increased.

Birth or Legal Adoption of a child- 25% of the Sum Assured can be increased.

On 1st, 3rd and 5th policy anniversary- 25% of the Sum Assured can be increased.

This option can be exercised at one or more of the events listed above, provided your total

revised Sum Assured is not more than 3 times your original Sum Assured.

The policy can be Stepped Down also if further increase in sum assured is not required.

Aviva Life Shield Platinum plan:-

Good rider options for the customers like Accidental Death Benefit and Dread Disease

Option of scheduling a monthly payment for the nominee in case of death of insured

Option to pay off outstanding liability like personal loan or home loan in the event of death of

insured

Kotak Preferred Term Plan:-

It is a pure Term Insurance Policy with Death Benefit only and no Maturity Benefit

Non-smoker and Women discounts are available in this policy

3 additional riders are available

Option to move to other non-term plans of Kotak Life Insurance is also available at any time

except the last 5 years of the policy.

ICICI icare:-

Can be exclusively purchased online without agent intervention and at a low cost

Comes with High non-medical limits

Offers a choice of accidental death benefit rider where additional sum assured is paid to the

nominee in case of death due to accident

Bharti AXA Elite Secure Plan:-

Long Term cover available till the age of 75 years

Additional Accidental Death and Disability Benefit Rider and Critical Illness Benefit Rider

available

Metlife Met Suraksha Plus Plan:-

There are options for single and limited pay along with regular payment options.

Additional cover with riders is available and Special discount is given for Non-smokers.

High coverage till 70 years of age and 35 years of policy tenure.

Aviva Life Shield Plus Policy:-

The plan offers high levels of cover at lower premiums.

You get discounts on premiums if the sum assured is higher than 25 lakhs

Lower premium rates apply for women

HDFC Term Assurance Plan:-

Provides a large sum assured discount for sum assured more than Rs 25 lakhs.

Unique feature of covering joint life

Aviva Life Shield Advantage:-

High levels of insurance cover for your family

The premiums paid by you are paid back to you at the end of the policy term, if you survive the

policy term

Lower premium rates for higher amounts of cover

There is a variant of the plan, called Option A, in which the premiums offered will not be

returned. The details mentioned in this page are for Option B which is with return of premium.

Reliance Term Plan:-

It has inbuilt Waiver of Premium rider for Total Disability and Accidental Benefit and Total and

Permanent Disability riders.

The rider can be added at inception or any other policy anniversary.

Discount is provided to woman policyholders

ING Term Life Plus Plan:-

There is Mid Term benefit available, which is not available in any other similar policies in the

industry.

Additional rider benefits of Accidental Death and Accidental Death, Disability and

Dismemberment benefit.

Single and limited premium payment options available.

ICICI Life Guard Level Term With Return of Premium:-

This is a plan where the sum assured is paid to nominee if life insured dies within the policy term

and the premiums are returned to him on maturity if he survives the entire tenure

 There is a unique feature of availing 5 years of extended cover post maturity of the policy

without any additional payment of premium at 50% of the original sum assured

There is a guaranteed surrender value available for this policy.

Max Life Platinum Protect Plan:-

It is a pure Term Insurance Policy with Death Benefit only

After paying for 15 years, if customer chooses not to pay any more, then also reduced life

coverage continues till the end of the policy term.

Discount is provided for female and non smokers and amazing discount for healthy non-smokers

above Rs 50 Lakhs Sum Assured.

Additional benefit of Accidental Benefit and 10 most common Dread Disease Benefit available

as rider.

Premium Applicable for various Term Plans:-

The premiums above are for 30 yrs old non-smoking male, and 30 yrs policy tenure. The

premium quoted is for Rs 1 crore sum assured and does not include service tax. The premiums

displayed were taken from respective life insurance companies websites and should be treated as

indicative premiums.

Brief overview of RidersMost of the term plans also allow riders along with their plans. Riders are nothing but additional

benefits which you can take by paying some extra premium. Lets see some of the riders and what

they mean. A term plan might be offering some of the riders mentioned below.

AD (Accidental Death) : The policy pays you additional sum assured in case the death

happens due to an accident . Note that even if you don’t take this rider, the sum assured is

always paid on death, whether accidental or not !.

CI (Critical Illness) : This rider gives you a lump sum amount if you are diagnosed with an

illness which is mentioned in the policy . Generally all the major illnesses are covered

in Critical Illness cover.

DR (Accidental Disability Rider) : This rider covers you for disability and pays you Sum

assured in 10 installments per year  incase you becomes temporary or permanent disabled

person.

Company Name Policy Name Mode Riders Available

Premium(1 crore SA)

Aegon Religare iTerm Online Yes 7,300Bharti Axa e-Protect Online No 7,300Aviva i-Life Online No 7,368HDFC Life Click2Protect Online No 10600Kotak e-Preffered Online No 10825Edelweiss Tokio Life Protection Plan Online Yes 11,500Metlife Met-Protect Online No 11,600ING Vyasa My Term Insurance Offlin

eNA 11,891

ICICI Prudential i-Care Online Yes 13000DLF Pramerica U-Protect Online Yes 13,400SBI life Smart Shield Offlin

eYes 16,798

Bajaj Allianz iSecure Online Yes 18400Max NewYork Platinum Protect Offlin

eYes 23,500

IDBI Fedral Termassurance Online No 25,350LIC Amulya Jeevan Offlin

eNo 33,600

WP (Waiver of Premium) : This rider makes sure that incase you are not able to pay future

premium due to disability or income loss, the future premiums are waived off , but your policy

is still in force like always !

Claim settlement Ratio of Life Insurance CompaniesWhile deciding on a term insurance plan, the biggest point which a person concentrates is

theClaim settlement ratio (read this comment) . Claim Settlement ratio of a company tells you

that how many policies were settled by paying back the claims in case of death. However note

that these numbers are not for pure term plans, but for any kind of policies.

Solvency Ratio of a Life Insurance Company

Another small things to look in a life insurance company is Solvency Ratio. It indicates how

solvent a company is, or how prepared it is to meet unforeseen exigencies. It is the extra capital

that an insurance company is required to hold to meet all the claims which arise .  In other

words , Solvency margin refers to the excess amount of asset the insurance company has to

maintain over its liabilities. Basically, it is the amount the insurer has to stash away in order to

pay the claims during emergency. IRDA requires the insurance companies to maintain a

particular level of solvency margin for their smooth functioning

Below is the Table and a Chart showing Claim Settlement Ratio and Solvency Ratio of all the

insurance insurance company in India. The data is taken from 2011-2012 IRDA annual Report.

Company Name Claim

Settlement Ratio

(2011-12)

Solvency

Ratio

LIC 97.4% 1.54

ICICI Prudential 96.5% 3.27

HDFC Life 96.2% 1.72

SBI life 95.5% 2.04

Kotak 92.1% 2.67

Birla Sun Life 90.9% 2.89

Bajaj Allianz 90.6% 2.86

Max NewYork 89.8% 3.65

Aviva 89.6% 5.4

ING Vyasa 88.8% 3

Bharti Axa 87.7% 2.14

Star-Union Dai-ichi 86.2% 6.7

Reliance 84.6% 1.66

Tata Aig 83.9% 2.16

India First 82.2% 6.36

Metlife 81.4% 1.69

Canara HSBC 80.6% 3.07

Sahara Life Insurance 78.0% 4.82

Future Generali 68.1% 2.21

IDBI Fedral 67.5% 6.6

Aegon Religare 66.1% 3.22

DLF Pramerica 24.5% 2.53

Edelweiss Tokyo 100% (Just 1

policy)

NA

Claim Settlement Ratio of 2012-2013

Trends in Claim Settlement Ratio in last four years

Online Term Insurance vs Offline Term InsuranceWith online term plans coming in market, two things has happened. First, Customers have really

got excited seeing very low premiums which insure them at throw away prices, however low

premiums does not appear on the top wish list of customers and what everyone needs is very

high claim settlement ratio and excellent customer service. This is where online term plans have

disappointed customers, there has been huge disappointment from ICICI iCare and AEGON

Religare iTerm Plan in terms of customer service. There have been cases where customers

bought the online term plan and after that, they had horrifying experiences starting from increase

of premium once they bought it, No-response from the company for long duration and Long &

frustrating delays in medical tests. This is what pisses off customers most and they get a feel that

If situation is bad at the time of buying the policy, then what will be the response when their

families for claim settlement.

Another important point which comes to a person’s mind is Are private Insurance companies

safe ? and what is the claim settlement ratio of the company. From last year IRDA report, we

came to know that AEGON Religare did not settle even a single claim out of total 7-8 claims

they got . However, this year’s IRDA report (2009-2010) shows that its better at 48% settlement

ratio for AEGON Religare, but Life Insurance is not a maths exam where 90-91% marks will

make people happy. We all need 100% or 99% at least !. Because most of the companies are very

new, the trust factor is missing from public. Note that not everyone who bought online term plans

had bad experience, there are many buyers who got very good response and good customer

service, but it was a smaller section .

So if you a kind of buyer who understand Insurance very well and how things work in this area

and you also have trust in online term plans then you can go for online plans. But if you are not

comfortable with it, then you should try the old way of buying insurance through an agent.

However it would cost more than online term insurance, which many are comfortable with! .

If you concentrate on the claim settlement and trust factor then the only option is LIC of India

Term Insurance (Jeevan Amulya). However if you are fine with the pvt Insurance, but still

want the best features, I personally see Kotak-preffered Plan as a good option. The premium for

Kotak-Preferred is the lowest in the offline term plans and this plan has good riders along with

other good options. Term Plan from LIC is obviously the best option if you do not believe in the

pvt companies and insist on high claim ratio, but premium for LIC term plan is too high . So I

think you can consider a mix of the LIC term insurance and any one from Pvt insurer. Soon you

will also see LIC online term plan