Choosing the Best Term Insurance: Is Tata AIG the Right Choice for You?

I am planning to buy an insurance term policy. Which is the best company in this regard? Please consider the following parameters:

1. Premium
2. Claim settlement process
3. Long-term perspective

Please also clarify if a person is alive after the insured period, do we get anything back in a term policy. What is the best method of paying - annual, quarterly, or monthly?

In specific, let me know about Tata AIG in the case of a term policy. Is it good to choose this because premium-wise it is the best? What about other factors?

Hello,

In term policies, the premium is low, and the person is adequately insured. If this is your first policy, then please go for it. You need to insure yourself first. It does not have the advantage of any payback after the policy term expires; that's why the premium is low. Insurance agents also do not recommend this policy as the commission percentage is low on this policy.

For example, for a Rs. 10,000 premium, other policies will insure you for Rs. 2 lakh, but there will be benefits after the policy matures.

With the same amount of premium for a term policy, you can get insured for around 30 lakhs, but a term policy does not have the maturity benefits.

My suggestion is to take a term policy for a 15 lakh cover, which should cost you around 5000 per year, and invest the rest of the 5000 in some other instrument.

Pay your insurance annually. For that, you can open a recurring deposit account and deposit a definite sum in that account and use that amount to pay your annual premium. It will earn interest as well.

Thanks and regards,

Shailender Bali
New Delhi

Hi,

The term is good when someone is not financially backed up. It covers initially for 30 odd years at a flat rate.

Suppose a 23-year-old takes a cover for 10 lakh, then he has to pay 2400-2600 INR. Whereas if he had invested the amount in a ULIP-based product, he could have gotten the same at around 1100. ULIP starts from 10K per year.

Advantages of ULIP:

1. Investment for continuous years
2. Gives good returns
3. Long insurance period can be covered till age 85 years
4. Tax benefits
5. In case after 5 years if someone withdraws the amount, no TDS will be deducted (NSC, FDS, etc. are taxable)
6. Insurance charge is deducted on a monthly basis

Demerits:

1. In the 1st year, 25% of the amount is vested in management, policy charges, and advisor paid-ups.

Good Companies:

1. Reliance Insurance
2. Kotak

Worst Companies:

1. LIC - Poor growth of money
2. Bajaj Alliance - 70% charges

Why ULIP or Insurance:

1. Good return versus Post office scheme (that's to fetch accrued income & TDS is deducted on them)
2. Better than a 5-year lock-in FD, which gives a return @9%.

Here, one can expect a 25-35% 5-year compounded earning after all charges, including insurance charges too.

Regards,

Rakesh Kukreja
+91-9891608516