Insurance
Bharti AXA iProtect—Online term life insurance hits a new price bottom

There is a new insurance product using the iProtect brand name in the market. ICICI Pru Life has one and now Bharti AXA Life has used the very same product name. The premium is cheapest offered so rar, which means that price war between insurers is still hot. The Bharti product is a good deal for non-smokers, but a little expensive for smokers

The Insurance Regulatory and Development Authority (IRDA) has allowed the same product name for new a term life insurance plan. iProtect is a product from ICICI Pru Life and now Bharti AXA Life has launched a product with exactly same name for its online term life insurance. IRDA has done this in the past, too, but it is rare to have the same product name from different insurers. Is it intentional copying of the product name? We don’t know.

Bharti AXA Life iProtect is now the cheapest online term life insurance plan for non-smokers. There is a wide difference in the premium between smokers and non-smokers. The premium for Rs50 lakh Sum Assured (SA) for a 27-year old non-smoker male based in Mumbai for a policy term of 25 years is Rs3,700 (excluding taxes). On the other hand, the premium for a smoker in the same case will be Rs6,150 (excluding taxes).

Recent entrants DLF Pramerica U-Protect and Edelweiss Tokio Life Protection have premiums which are the lowest in offline term plan space. Their premium are Rs5,956 and Rs5,984 respectively for similar parameters. Both the products are offline as of now.

Aviva i-Life was the cheapest term life insurance till now with the revamped Aegon Religare iTerm closing the gap. HDFC Life Click2Protect was recently launched to compete in the online term market. The much-awaited online term plan this year will be from LIC, which is is expected to hit the market soon.

Advantages of Bharti AXA iProtect

  • Cheapest term life insurance
  •  For SA above Rs50 lakh, premium discount is given
  • This policy offers reduced premium for non-smoking policyholders
  • Family care benefit: This benefit becomes applicable after premiums for two consecutive years have been paid. Under this, a part of SA equal to Rs1 lakh is provided to the nominees within 48 hours of submitting all the required claim documents. The 48-hour time limit is subject to some conditions like working day, etc
  •  The press release specifies no medical test till Rs50 lakh, however, the brochure silent on the medical test

Disadvantages of Bharti AXA iProtect

  • The maximum age at maturity is 60 years. Many other plans are available till the age of 70 to 75 years.   
  •  Policy term can be for 10, 15, 20, 25 and 30 years. E.g. A policyholder of 42 years will be offered a maximum policy term of 15 years which will end when the person is 57 years. It will not be easy to get another term plan from another insurer at that age.
  •  Minimum sum assured is Rs25 lakh
 
Online term life plan options for Rs50 lakh sum assured for 27-year old non-smoker male based in Mumbai for policy term of 25 years. Premium inclusive of taxes

ICICI Pru Life iCare has tried to address the major hiccup with the online term insurance buying process. The medical tests which online term insurance products require for all (or higher age groups) has been done away with this innovative product. There were issues like premium hike after medical tests which used to catch customers by surprise. This one-of-a-kind product will have no medical tests and no surprises of premium hike. This is an online term plan in the complete sense.

The question is whether an online sale without any agent makes up for such a gigantic difference in the premium? It cannot justify the enormous variation; even though that’s the standard answer you will read or hear from the insurance company. Is there an assumption of the online buyer living a healthy lifestyle, having access to proper healthcare and hence will live longer? Time will tell if the assumptions stand true. The mortality experience of the product will tell if the premiums collected are enough or the insurance company has a hole in its pocket.

You may also want to read:

HDFC Life Click2Protect—an online term life insurance @50% discount

Online term life insurance – Race to the bottom?

Online term plans
 

 

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COMMENTS

Dharmesh Kumar

5 years ago

Term Plan

misrilal k

5 years ago

it very good policy in fact iam intrested to know some more details about the policy can you send our excecutive to meet me 9948720718

Madhusudan Thakkar

5 years ago

Raj....Looking Good....Excellent analysis ...One of the best piece of yours...Keep it up...Only ML can do such in depth analysis....Thank You

REPLY

raj

In Reply to Madhusudan Thakkar 5 years ago

Thanks, Mr. Thakkar

Madhusudan Thakkar

In Reply to raj 5 years ago

Aaisa piece lik ke aap agent community ka kya chuthe kaarana chate ho...Raj Saab?.....LOL...This piece is written without FEAR or FAVOUR to any company.....Keep up the good work under guidance of Sucheta Ji & Debhashish

raj

In Reply to Madhusudan Thakkar 5 years ago

thank you. hope you like the Moneylife cover story has came in the market today. Read it.

RAJESHWAR REDDY

5 years ago

The purpose of taking the term insurance is to support the family in that particular persons absence.what is the use if the companies reduce the premium and as well as reduce the claim settlement ratios? Only LIC where agent is the mediator will solve this purpose.The figures prove this as per the IRDA Report.

REPLY

raj

In Reply to RAJESHWAR REDDY 5 years ago

LIC does have best settlement ratio. Insurance companies who are in business for short time will not have high settlement ratio as early death claims (within three years of taking policy) are scrutinized more by all insurance companies including LIC. As the insurance company grows old, these ratios are supposed to improve.

Read our cover story on term plans http://moneylife.in/article/online-term-...

RAJESHWAR REDDY

In Reply to raj 5 years ago

Then how come 2 companies which are started in the same year 2000 have different claim settlement ratios.Example : HDFC and Max New York which have 91.14% and 65.51%

raj

In Reply to RAJESHWAR REDDY 5 years ago

Read again. I have written that these ratios are SUPPOSED to improve.

Max New York...we had already written about it. Read http://foundation.moneylife.in/article/m...

B V Vijaya BE CIS

5 years ago

You haven't mentioned the premium of LIC of India which makes your article more biased to Pvt. Insurers. LIC happens the biggest Insurer in India with Highest Claim Ratio in the World. Side by side you should have mentioned the claim ratio of all companies too which is a major parameter.

REPLY

raj

In Reply to B V Vijaya BE CIS 5 years ago

The article is for online term life insurance. LIC does not have online plan till now.

How can you say that the article is biased to private insurers? It mentions that the low premium pricing for online term plans is based on assumptions which only future will tell if it holds true.

If you want to read about settlement ratio and many other details, please read http://moneylife.in/article/online-term-... It is a cover story which is on the home page of the Moneylife website under Moneylife Essentials. How did you miss it?

There are also many other short articles on latest settlement ratio, etc. You have to do search on Moneylife website if you want to read on different aspects of life, health and auto insurance.

Don't expect a news article to give you information on all aspects of life insurnace industry.

Government moves SC seeking review of Vodafone tax verdict

The Government is seeking review of the apex court's decision which said the I-T department does not have jurisdiction to levy tax on the overseas deal between two companies

NEW DELHI: The Union Government on Friday moved the Supreme Court seeking review of the apex court's verdict in the Vodafone tax case. The SC had said that the Indian Income Tax Department does not have jurisdiction to levy Rs11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group, reports PTI.

The Court had on January 20 allowed Vodafone's appeal and had quashed the Bombay High Court verdict which had upheld the decision to levy tax on the overseas deal.

The apex court held that Vodafone's transaction with Hong Kong-based Hutchison Group was a "bonafide" foreign direct investment (FDI), which fell outside the tax jurisdiction of the Indian authorities.

A bench headed by Chief Justice SH Kapadia had held that the offshore transaction was a "bonafide structured FDI investment" into India which fell outside India's territorial tax jurisdiction.

It also asked the I-T Department to return Rs2,500 crore deposited by Vodafone, in compliance of its earlier interim order, within two months along with four per cent interest from the date of withdrawal of money by the tax department.

It also asked the Supreme Court registry to return within four weeks the bank guarantee of Rs 8,500 crore given by the telecom major.

Through the $11.2 billion deal in May 2007, Vodafone bought 67% stake in the Hutchison-Essar Ltd (HEL) from Hong Kong-based Hutchison Group through companies based in the Netherlands and Cayman Island.

Meanwhile, Vodafone in a statement, said that the apex court had clearly and unambiguously ruled that there was no tax to pay on the Vodafone-Hutchison transaction.

"Vodafone notes the filing of the tax authorities review petition, which will be evaluated by the same bench that ruled on the case and has no further comment to make at this stage," it said.

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Flawed Greek: The bailout may be more than 320 billion euros

Probabilities point to the largest default in history. The cumulative costs to bail out the tiny Mediterranean nation might cross 320 billion Euros, which is more than the GDP of Greece

The unravelling of the Greek crisis has taken a toll on the European market sentiment of late. This has made the market second guess the outcome plenty of times over, which has not only led to increased uncertainty, but also increased sentiment and volatility.

According to Zero Hedge: "In Greece it is now clear that the process of avoiding a credit event for the past 21 months has been ruinously expensive. Frustrate the markets (again, individuals making rational, fiduciary decisions, not some conspiracy pursuing an agenda) and they will find a way around the frustration, in our view; in the meantime, costs will increase due to the inefficiencies created, as has happened in Greece."

To put it in plain English-policy makers have been bickering with each other, causing procrastination and policy paralysis, perhaps leading to the inevitable-a massive default (?). As you may be aware that during May 2010, it was decided to bail out the Greek economy to the tune of 110 billion euros. However, it is estimated that the cumulative costs to bail out the tiny Mediterranean nation might cross 320 billion euros, which is more than the gross domestic product (GDP) of Greece! The stubbornness of European politicians, technocrats and bankers has only made things worse, not better.

According to the same blog, "global bankers now have a priming lien on 136% of Greek GDP." Symbolically, Greece isn't Greece anymore; the country effectively belongs to the banking syndicate. The funny part is that it is the bankers who stand to gain from the very mess they have created. By giving massive loans to Greece, which it has defaulted, they not only pocket fees and interests but also stand to benefit from the "bailout" package that is, and more probably will be, given to Greece.

William Porter of Credit Suisse feels that the market may have misread the exact requirements of the bailout. Instead of the required 50 billion euros in capital that banks require, he feels that the "bailout" process will not be "orderly" since the requirement is much higher than what the market thinks. According to him, "The 2011 consensus range of bank capital requirements was 100 billion euros to 400 billion euros.... ....always seemed like a sensible estimate to us. The market is proceeding on the assumption that the need has all but gone away; many estimates now centre on 50 billion euros. Such numbers strike us as ridiculous...."

He adds, "The market is essentially proceeding on the assumption that banks' capital requirements can be met organically, through earnings and deleveraging...But this is not a short-term process and cannot be, if it is to remain orderly..."

In other words, the Greeks will have to work more hours, for less pay, in order to "earn" for the "de-leveraging" to happen, and this takes time, not a matter of months but years and possibly decades. After all, Greece only contributes to 2.5% of the Eurozone's GDP, hardly substantial enough to quickly recover.

Its economy virtually thrives on tourism. Instead of unifying and agreeing to certain conditions laid down by creditors, the Greeks have resorted to riots, in droves, on the streets of Athens, and protests en masse against "austerity measures". The Greek parliament passed these measures, which includes a 22% reduction in the minimum wage and 150,000 jobs from the public sector workforce by 2015. The Greek populace would have to work hard, for survival and to make bankers richer, in order to pay off its external debts.

This will not be sustainable as markets and policy makers are only concerned with short-term results, or as behavioural economists call it "recency bias". Markets tend to focus on recent events and put a premium on it. In order for Greece to survive, it would have to go through a lengthy period of restructuring, much like Japan. Most creditors who have lent to Greece do not have the patience, nor are the Greeks willing to toil for years.

The deadline for the Greek government bonds repayment is 20 March 2012. However, it seems that the country does not have enough funds to pay it off. William Porter feels that Europe will be better off if Greece simply defaults on the 20th March deadline. If Greece avoids default, and instead, pays for its ever increasing debt, it means pledging more assets (which is meaningless because Greece is virtually broke), agreeing to uncomfortable covenants in its debts which will have an impact on the daily life of an average Greek.

The ongoing negotiations have made the markets jittery is because Greece wants more debt, and policy makers seem to entertain the notion that Greece is an integral, and should be, part of the Euro, which otherwise might lead to "systemic" problems. We do not rule out another bailout; however, simply borrowing more debt in order to repay, well, more debt will only aggravate things further and will lead to a messy or "disorderly" ending-a market crash. Porter phrases it in a very succinct manner, stating that "Overall, we are left with a sense that the probability of delivering the largest default loss in history in a disorderly way on or before 20th March has increased relative to doing so in an orderly way."

To cut a long story short, despite what we have highlighted, the odds that the markets will be volatile in the coming months will be high and the potential damage unknown. As politicians, economists, technocrats and, the least liked, the bankers continue to pretend that a "solution" will be arrived at, the odds of a catastrophe is only increasing by the day as are the costs. It would be prudent to buckle up your seat-belts because it might be a bumpy ride from now on, because everything is in Greek and undecipherable now. The markets all over the world, including the Indian markets, are pretending that all European and American problems are over and a major bull market has begun. Either Credit Suisse has got it all wrong or the markets are under some delusion. We will know soon what the truth is.
 

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