Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Commentary

ICICI Launches Online Term Insurance

ICICI Launches an online iProtect plan – for a 35 year old, the premium is just 24,000 for a 30 year, 1 crore term insurance. This is bought entirely online (no agents).

image

This is fairly cheap, but the only problem I have is that this is ICICI insurance and I’ve had a bad experience with their claims process.

Their comparable other product, the offline Pure Protect, offers 50 lakhs of insurance for 18,000 (30 year term). The online product, for the same conditions is 30% cheaper at 12,850.

I like this competition to Religare’s iTerm, and I really hope LIC jumps in. I trust them a lot.

  • Srikanth Meenakshi says:

    >//I really hope LIC jumps in//

    I do too. But I think that's unlikely. LIC relies on their army of agents to sell their policies and such a move would be seen as antagonistic towards them. These "i-policies" cannot be distributed by agents and there are zero commissions involved.

    – Srikanth

  • Anonymous says:

    >+1 for online LIC Policy

  • Siddharth says:

    >Hello Deepak,

    Thnaks for highlighting the cheap price. Wonder how worth the service can be, given the claim experience.

    Also in regards to opting for term insurance, the more delay the more expensive it becomes, unlike other services which become cheaper over the years.
    Unless LIC reduces the overall costs drastically.
    regards

  • Anonymous says:

    >I have a term policy from LIC, not only it is costlier but it doesn't have important riders such as critical illness or accidental benefits.

    However it has a good track record in claim settlement. You don't want the survivors to suffer while getting the claim so it's okay to pay a bit extra!

    ~Madhab

  • Prasad says:

    >As mentioned already, I feel LIC will not indulge in online policy options, at least in the foreseeable future. When LIC is taken out of the equation, almost all the other private insurance firms are at par with each other when it comes to claim settlements. So, other than the premium amount, it doesn't make much difference if the policy is from ICICI or Bajaj or Birla.

  • Vini says:

    >Found no details or references for T&C2 non-medical cases on the website.

    So much for web enabled transparency.

  • kbmu says:

    >Hi Deepak,

    When you take a term plan // say for a period of 30 years // the premium you pay every year is "Level-Premium" , which means , if your entry age is 35 and the policy runs till age 65, they add the "mortality-rate" for each age and divide it by 30, then you get your "Level-Premium", This is stated by the insurance companies as Win-Win situation. Let us explore further, for example:- Let us assume premium as per "mortality-rate" for age 35 is 8,000/- and for age 65 is 45,000/- , by Leveling they may arrive at 22,000/- as regular yearly premium. In the first year the excess paid amount (22000-8000 = 14,000) is an excess received by the insurance this is invested in Long term assets, (we all know long term yields are good if spread properly in the stock market) but assuming the yield is only 8 % CAGR, calculate the return possible after 30 years. The argument by the insurance company is that there may be more deaths in the later age, which could be true, But, the insurance companies just pay a part of the premium received from us to the re-assurance companies and pocket the balance. That is why long term no insurance company (Life insurance) can go bust – (provided they follow strict medical norms while issuing the policy).

    Alternately, imagine we are disciplined investors (most of us may not be – but for example to compare let us believe, we are disciplined) , suppose we have the option to pay only the current premium for the respective age and agree to pay excess amount of premium as the age increases, we can pay just 8,000/- this year and invest the balance 14 years in long term and so on, over the period when we require to pay extra, we can sell part of the holdings and pay (if we calculate money value etc etc, actually we may be paying less over the period) and there is another great possibility that beyond certain age all your dependents are well settled and there may not be need for a cover, you can always discontinue. (but having paid Level-premiums and quit in between when you are alive, you are not getting anything back from the insurance company, you are a looser),

    So the best way to plan is select policies like "invest-assure-flexi" of Tata-AIG, where you can select your coverage to multiple number of times of your yearly premium, all charges are declared up-front, mortality charges are charged as per the age and as per the table, the balance amount is invested in market (as good as mutual fund), you get high cover and likely to get returns at the end of term and you have flexibility to close or part withdraw after 5 years.

    Other companies like Birla sun life/max new york / LIC have similar (but slightly different) Policies.

    Wishes for Long life,

    With Love & Regards,
    Vetrivel – http://www.8ana.com

  • Deepak Shenoy says:

    >Vetrivel: Thanks, but that's only good in theory. Tata AIGs plan has a limit of 60x the premium, which is bullshit (For Rs. 50K per year, I can only get 30 lakhs of insurance????)

    The number you need is about 300x at age 35. Birla Sun Life's dream plan did provide for that, I remember, and I'd mentioned that as an interesting plan.

    And Vetrivel, be careful – Tata AIGs charges are horrendously huge. Check their brochure – 25% commissions in the first two years, and they keep taking commissions till the last year (1%) – disgusting.

    I did a calculation on their web site – the premium you need to pay for a 1 cr cover is Rs. 1.67 lakhs a year. Stupidity.

    Plus, even if you work their mortality tables, it doesn't work out to the 'leveled' amount. For instance for my age the mortality premium at Tata AIG Flexi Assure plus is about 14,000. For age 55 it's 90,000. I presume for 65 it will be 100,000+. I can't see how the average will be about 24,000 (which is what the online term policies are offering)

  • sachin8778 says:

    >Hi Vetrivel,
    I must say this is the first time I have seen an intelligent argument pro ULIP, well try. Nevertheless all ULIPs are crap and big NO NO. The best is the combination of term insurance and Mutual Fund (or longterm direct equity investment if you can handle it).

    Deepak, I completely agree with your points against ULIPs.

    Cheers,
    Sachin

  • Mitran says:

    >Hi Deepak,
    Thanks for another eye opening reply. Could you please suggest me a term policy (if possible with raiders with consistent good claim process). I am 29 and want to take cover for 40 Lakhs.

  • Deepak says:

    >Deepak,

    getting a large term policy from LIC is a pain.. I have been trying now for a few months…its a large policy by most middle class standards but is just 6 times my annual gross pay… but they are treating me like I am the biggest moral hazard they have ever met, I am so frustrated I cant express but I am putting up with all this as my claims experience with them has been good…

  • rakesh says:

    >Deepak,

    If given a choice between Ageon Religare and ICICI which one you would opt for.

    Rakesh

  • kbmu says:

    >Dear Deepak ji,

    Thanks for the reply. I hear comparing policies from the tables/and/web-site is one thing // and actually getting a policy ISSUED is another thing.

    Many have complained that // after medicals // companies either rake up the mortality charges OR add health extra OR offer reduced cover than desired demand !!! I have not experienced , but many have complained.

    Somehow , I have a feeling that all insurance companies are almost of same mentality , you get actual satisfaction of service only through the agent (or advisor-whatever they call now-a-days)

    Good discussion/ but one thing is sure whether we will take insurance from these companies or not // when they are listed we should have them in our portfolio, they are sure to yield very good returns.

    Thank you, and Regards,
    Vetrivel

  • Lokesh says:

    >Vetrivel

    even if Tata Aig was to give a policy for RS 1, I WOULD not recommend that anyone go for it. I had purchased a car insurance policy from them directly. Their ececutive came to home, collected the pyment and gave me the policy doc there itself. great service. but that was the last piece of service.
    they had promised me a discount booklet, i did get it but it was expired. Emails to customer sercice and the execs did not get any response. Calls to their customer svc were again met wth we-will-call-you-back. They could not resolve such a minor matter.
    At the time of renewal, they again became active and called me on a daily basis but could not explain why they did not resolve my complaint in the first place.

  • Sameer says:

    I feel Aviva i-Life again is the closest competitor to this online term plan.