Apr 08, 2006 01:23 PM
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(Updated Apr 08, 2006 06:34 PM)
Comparing the various term plans, with their options and flexibilities, I found the SBI Life Shield plan as a very interesting option worth looking at. I compared this product with LIC's Anmol Jeevan and Amulya Jeevan policies, HDFC standard life's policies and ICICI Prudential's term plans. Options: The most startling feature of this policy is that it comes in three flavours.
Level Term Plan:
The first one is a level term plan where your sum-assured remains constant through-out the term of the policy. This is the same as that provided by all other insurance companies. Nothing new here, except that one can opt for an accidental disability benefit rider and a premium waiver rider. This is where this policy scores over LIC's plans.
Increasing S.A @ 5% P.A:
The second one is a plan where the sum-assured increases at a rate of 5% every year. This policy is in trend with the present inflation rates and the increase in sum-assured every year is a novel feature, Albeit one has to shell out more premium. Still the premium in this policy works out to be the same as a level term policy taken for the value of the sum-assured at the 13th year of the policy. This plan also has an optional disability benefit rider and a premium waiver rider.
Increasing S.A @ 50% P.A:
This plan stands head and shoulders above the rest of the plans. Assuming the worst case of 10% inflation per year. Or a compounding inflation factor, this plan gives the consumers maximum benefit at the time they need it. Comparing it with the plans of LIC, the premium is reasonable and the risk coverage grows along with the age. This plan also has an optional disability benefit rider and a premium waiver rider.
Practicality of the plans:
The benefit of the last two plans is that it covers higher risks for the insured in the later stages of life when it is needed the most. e.g. a consider a person 30 years of age, will need maximum protection for his family between 40 and 55 years of age, when his/her kids are in their teens and struggling to make their career. Well thought out innovative plan in alignment with the needs of the consumer and in tune of the times. This is not to say that between the age of 30 and 40, one does not need insurance. But its just that, there are other options for his family between those age. After the age of 40, when one does not have the option of re-marriage, is when this plan comes into picture with maximum benefits. Another case with regards to Term plans is the availability of Riders for Accidental Permanent Disability and the premium waiver rider. Say for example, a person gets into an accident one needs an immediate relief, It is true that there are medi-claim policies that support hospitalization.
But thought also needs to be given to the fact that when the person returns home after hospitalization, he/she needs some immediate financial assistance. That is where the accidental disability rider comes into picture. As the policy provides for 10 equal annual installments of the Sum-Assured in the Accidental Disability policy as a relief measure. After the accident, If the insured expires in due course of time, the accident benefit as well as the total sum-assured is given to the nominee.
Now, consider a case where a person, met with an accident or otherwise terminally ill, goes into a coma and is unable to pay his/her further premiums for the term policy. Under such an eventuality, all other term plans from LIC and others would lapse immediately. The situation can be quite demanding mentally for a person knowing that his family is not financially protected and he himself is in a helpless situation.
Now the bread-winner in the family has to depend on his extended family for the support and welfare of his wife and children. This situation can be avoided by taking the premium waiver rider so that the base policy continues till the insured survives with some peace of mind.
How-ever I have the following questions regarding this plan.
Although the plan looks very good on paper, is there a catch somewhere?
How good is SBI Life's reputation for claims settlement? I hope it is better than most government institutions..
How reliable is SBI Life as compared to other private insurance companies. I know that LIC is very reliable being a very large organisation. But, I also believe that the agent's of LIC are more interested in maximizing their commissions rather than giving serious thoughts to the need of the insured person. Besides, LIC's premiums have increased and they do not provide riders with their policies.
The plans are too good to be real and are they sustainable in the long run?
I know how term plans work, but isn't these plans a huge risk for the insurance companies. How can the companies sustain themselves with such plans?
Needless to mention, I am expecting your feedback and suggestions.
