Choosing the right term insurance in India can feel overwhelming, especially with so many companies and policies out there. But don’t worry, it’s not as complicated as it seems. Let’s break it down step by step, using simple language and examples, so you can make an informed decision without getting lost in financial jargon.

1. Start with the Features You Need

First things first, figure out what you actually need from your term insurance. Think of it like buying a car—you wouldn’t buy a sports car if you need something to drive your family around, right? Similarly, term insurance policies come with different features, so you need to know what’s important to you.

For example:

• Sum Assured: This is the amount your family will get if something happens to you. Think about your family’s needs—how much would they need to maintain their lifestyle if you’re not around?
• Policy Term: How long do you want the coverage for? If you’re 30 and want coverage till you’re 60, you’ll need a 30-year policy.
• Riders: These are add-ons like critical illness cover or accidental death benefit. If you’re worried about specific risks, these can be useful.

Let’s say you’re a 35-year-old with a family of four. You might want a sum assured of ₹1 crore for 25 years, with a critical illness rider. That’s your starting point.

2. Check the Premium

Once you know what you need, start comparing premiums. The premium is the amount you’ll pay every year for the policy. Different companies charge different premiums for the same coverage, so it’s worth shopping around.

For example:

• Company A might charge ₹10,000 per year for a ₹1 crore policy.
• Company B might charge ₹12,000 for the same coverage.

At first glance, Company A seems cheaper, but don’t stop there. You need to look at other factors too.

3. Look at Claim Settlement Ratio

Understand Section 45 of the Insurance Act

Here’s something important that most people don’t know about: Section 45 of the Insurance Act. This law says that if a claim is made within the first 3 years of the policy, the insurance company can investigate it thoroughly. After 3 years, they can’t reject the claim.

What does this mean for you? If you pass away within the first 3 years, the company might dig into your medical history, lifestyle, etc., to make sure you didn’t hide anything when you bought the policy. If it’s an accidental death, the claim is usually settled faster.

For example, if you had a pre-existing condition like diabetes but didn’t disclose it, the company might reject the claim if you pass away within 3 years. So, always be honest when filling out the application.

 The Claim Settlement Ratio (CSR) tells you what percentage of claims a company has settled in a year. A higher CSR means the company is more likely to pay out when you need it.

For example:

• Company X has a CSR of 98%, meaning they settled 98 out of 100 claims.
• Company Y has a CSR of 92%, meaning they settled 85 out of 100 claims.

You’d obviously prefer Company X because they’re more reliable. A high CSR gives you peace of mind that your family won’t face hassles when making a claim.

5. Stick with a Brand You Trust

If you’re already dealing with a company and like their services, it might make sense to stick with them. For example, if you already have a insurance policy with Company Z and they’ve been helpful when you needed them, you might feel more comfortable buying term insurance from them too.

But don’t just go with them blindly. Make sure their term insurance policy meets your needs and is competitively priced.

6. Check Their Customer Service

Here’s a common issue: companies are great at selling policies but terrible at servicing them later. You don’t want to be stuck with a company that’s hard to reach when you need help.

For example:

• Ask around or read reviews to see how easy it is to get in touch with the company’s customer service.
• Do they have a 24/7 helpline? How quickly do they respond to emails or queries?

A good way to test this is to call their customer service before buying the policy. If they’re helpful and responsive, that’s a good sign. If you’re stuck on hold for 20 minutes, maybe look elsewhere.

7. Read Third-Party Reviews

Don’t just rely on what the company tells you. Look for reviews from actual customers. Google reviews can give you an idea of how people feel about the company.

For example:

• If you see a lot of complaints about delayed claims or poor service, that’s a red flag.
• On the other hand, if most reviews are positive, it’s a good sign that the company is reliable.

8. Check the Ease of Claim Settlement

Finally, look into how easy it is to file a claim. Some companies have a simple, online process, while others might require a lot of paperwork.

For example:

• Company A might let you file a claim online and upload documents, making it quick and hassle-free.
• Company B might ask you to visit their office multiple times and submit physical copies of documents.

You want a company that makes the process as smooth as possible, especially during a difficult time.

Putting It All Together: An Example

Let’s say you’re a 30-year-old with a wife and a newborn. You decide you need a ₹1 crore policy for 30 years with a critical illness rider. Here’s how you’d approach it:

1. Features: You want ₹1 crore for 30 years with a critical illness rider.
2. Premium: You compare premiums and find that Company A charges ₹9,000/year, while Company B charges ₹11,000/year.
3. Section 45: You understand that if something happens within the first 3 years, the company will investigate, so you make sure to disclose all health details honestly.
4. CSR: Company A has a CSR of 98%, while Company B has 92%. You lean towards Company A.
5. Brand: You already have a life insurance policy with Company A and have had good experiences with their customer service.
6. Customer Service: You call Company A’s helpline and find them responsive and helpful.
7. Reviews: You read online reviews and find that most customers are happy with Company A’s claim process.
8. Claim Process: Company A lets you file claims online, which seems convenient.

Based on this, you decide to go with Company A because they meet all your needs and seem reliable.

Final Thoughts

Choosing the right term insurance doesn’t have to be stressful. Start by figuring out what you need, compare premiums, and then dig deeper into factors like claim settlement ratio, customer service, and ease of claim process. Don’t rush the decision—take your time to research and choose a company that you can trust to be there for your family when it matters most.

Remember, term insurance is about peace of mind. By following these steps, you’ll be able to find a policy that gives you just that.