One of the common questions that we have faced over the years is, “LIC is such an evergreen brand. Why don’t you recommend term insurance plans from that provider?”
And each time, our advisors have explained how LIC might be a popular name in the insurance industry, but that doesn’t make it a credible provider. The follow-up question has always been, “How can I know if an insurer is credible?”
(Honestly, we love such follow-up questions! After all, we are an insurance awareness & literacy platform!)
As an answer to this question, we offer them the list of the metrics used to measure the credibility of an insurance provider - Claim Settlement Ratio (CSR), Amount Settlement Ratio (ASR), Complaint Volume, and Annual Business Income. We also take into consideration the diversity in the product portfolio of these insurers.
Based on these factors, let’s throw some light on the two heavyweights in the industry - HDFC Life vs LIC - one a private sector provider and the other a public sector insurer.
HDFC Life vs LIC
| ASPECTS | HDFC Life | LIC |
|---|---|---|
| Claim Settlement Ratio (CSR) | 98.69% | 98.55% |
| Amount Settlement Ratio (ASR) | 87.3 | 95.1 |
| Volume of Complaints | 2.7 | 7.3 |
| Average Annual Business (in ₹ crores) | 24,315 | 217,726 |
| Major Term Insurance Plans | Click2Protect Life Click2Protect Super |
LIC's New Tech Term Plan LIC's New Jeevan Amar Plan |
Heads up! We know that life insurance can be overwhelming – but it doesn’t have to! Our IRDAI-certified advisors at Ditto assess your requirements and can help you pick the right policy. And the best part? We don’t spam or pressure you to buy.
HDFC Life vs LIC: Which is Better as a Term Insurance Provider in India?
HDFC Life Insurance began its journey in 2000 and now has an impressive average annual business volume of ₹24,315 crores. It has established itself as one of India's top private insurers, with a solid reputation that has made its products highly popular in the market.
Offering a variety of products such as group policies, ULIPs, retirement plans, savings plans, and term insurance, HDFC Life is known for its operational excellence. The company stands out with a high Claim Settlement Ratio, low complaint volume, and an excellent Amount Settlement Ratio. While their plans may be a bit more expensive than others in the same category, the comprehensive coverage and reliability they provide make them a strong contender.
LIC (Life Insurance Corporation of India) has been around since 1956, making it the country's oldest public sector life insurer. Over the years, it has built a reputation for offering various products, including endowment plans, ULIPs, pension plans, micro-insurance, and term insurance. LIC has attracted a large client base with its long history and extensive offerings.
But here’s the thing – a lot of LIC’s popularity comes from the fact that it used to dominate the life insurance market in India. Many older customers still trust LIC because it’s the name they know, often unaware of the newer, more efficient players in the market.
Moreover, LIC has seen some challenges lately. Competition is fierce, and newer insurers have been stepping up their game with better marketing and improved performance. Plus, LIC's term insurance policies tend to be more expensive, lack key riders, and don’t always offer the same level of coverage as other options. So, while LIC still has a large customer base, it’s no longer the go-to choice for everyone.
Now, when comparing HDFC Life vs LIC, remember 2 major things -
- LIC is a public insurer
- LIC’s industry experience is 68 years, against HDFC Life’s 24 years.
Considering LIC’s upper hand as once having the monopoly in the market and being the oldest public insurer in the nation, policyholders are bound to have certain expectations from the insurer.
(Note: We’ve used data from the past 3 years, averaged the numbers, and compared them with the industry average to give you a clearer view of the insurer’s consistency and overall performance.)
- Claim Settlement Ratio (CSR)
When shopping for a good life insurance plan, one of the first things to check is the insurer’s Claim Settlement Ratio (CSR)—it shows how well they settle claims. Here's how it’s calculated:
(Number of claims settled by the insurer / Number of claims filed with the insurer) * 100
If an insurer’s CSR is 97% or higher, that’s a good sign! You can then look into their other metrics (which we’ll cover in more detail) before making your final choice. But if the CSR is below 80%, it might be time to keep searching for a more reliable insurer.
| CSR across the years | HDFC Life | LIC | Industry Average/year |
|---|---|---|---|
| 2021 - 2022 | 98.66% | 98.74% | 97.50% |
| 2022 - 2023 | 98.66% | 98.66% | 98.19% |
| 2023 - 2024 | 98.66% | 98.24% | 98.73% |
| Average of 3 years | 98.66% | 98.55% | 98.11% |
CONCLUSION: LIC and HDFC Life both remain consistent about crossing the pre-set threshold (97) each year. However, the competition between the two, in terms of the Claim Settlement Ratio is extremely close, and LIC takes the win.
2. Amount Settlement Ratio (ASR)
The next important metric to look at is the Amount Settlement Ratio (ASR), which helps assess how financially stable an insurer is. Here's how it's calculated:
(Total amount spent on settling claims / Total amount received in premiums) * 100
The ASR is a great indicator of an insurer’s ability to handle long-term financial commitments, which is especially important for term life insurance. After all, you want an insurer who can reliably pay death benefits when needed. An ASR of 90% or more is a solid benchmark—anything above that shows the insurer is in good financial health.
| ASR across the years | HDFC Life | LIC | Industry Average/year |
|---|---|---|---|
| 2019 - 2020 | 92.6 | 93.5 | 90.80% |
| 2020 - 2021 | 80.1 | 95.8 | 91.20% |
| 2021 - 2022 | 89.4 | 96 | 90.60% |
| Average of 3 years | 87.3 | 95.1 | 90.90% |
CONCLUSION: HDFC Life’s Amount Settlement Ratio (ASR) is a bit disappointing, considering that it not only falls far behind the numbers of LIC, but for the last couple of years, it has fallen narrowly short of the set threshold of 90. On the other hand, LIC’s numbers are incredibly encouraging, which speaks volumes about the insurer’s financial stability and long-term sustainability. However, considering the immense client pool of the insurer (LIC), the numbers aren’t really surprising. In fact, LIC’s annual average business income is almost 30 times the total average annual business income of all the insurers combined.
LIC, thus, emerges as the clear winner in the case of ASR!
3. Volume of Complaints
When it comes to selecting a life insurer, a key factor to consider is their complaint volume. A lower complaint volume indicates a smoother claim settlement experience for existing policyholders, which speaks to the insurer's overall operational efficiency. The fewer complaints there are, the more reliable and trustworthy the insurer is likely to be. So, always keep an eye on this metric as it reflects the insurer's commitment to delivering a hassle-free experience.
| Complaint Volume across the years | HDFC Life | LIC | Industry Average/year |
|---|---|---|---|
| 2021 - 2022 | 3 | 12.8 | 76.5 |
| 2022 - 2023 | 2 | 4.9 | 77.1 |
| 2023 - 2024 | 1 | 4.2 | 61.3 |
| Average of 3 years | 2 | 7.3 | 71.96 |
CONCLUSION: In the case of CSR and ASR, LIC’s numbers are highlighted green flags; in the case of complaint volume, the numbers are a bit discouraging. On the other hand, HDFC Life’s complaint numbers are one of the best in the industry. Thus, HDFC Life takes the win here, which reflects the insurer’s success story in streamlining its claim settlement process. However, what’s worth mentioning here is that LIC’s complaint volume numbers have been steadily deteriorating. This is quite a positive sign for the insurer’s existing and potential policyholders.
4. Average Annual Business
When it comes to understanding a life insurer's credibility, looking at the average annual business volume can give you an idea of their track record. While this isn't the main metric for credibility, it does show you how big or small the insurer is. This helps you gauge whether you're dealing with a well-established company, which can affect your decision-making process. A quick look at the numbers will tell you whether the insurer is large, medium, or small and whether it makes sense for you to go with them for your term insurance.
| Average Annual Business across the Years | HDFC Life (in ₹ crores) | LIC | Industry Average/year (in ₹ crores) |
|---|---|---|---|
| 2021 - 2022 | 24,154.80 | 198,932.20 | 13,873.80 |
| 2022 - 2023 | 28,683.10 | 232,050.60 | 17,182 |
| 2023 - 2024 | 29,631.00 | 222,195.00 | 17,154.28 |
| Average of 3 years | 27,490 | 217,726 | 16,265.05 |
CONCLUSION: Honestly speaking, there isn’t a single life insurance provider that beats the annual business income numbers of LIC. As stated before, the industry collectively doesn’t generate the income that LIc does, alone. Now, while HDFC Life’s numbers are quite low compared to that of LIC’s, if you take into consideration that the former has only been in the industry for 24 years, the income isn’t bad. However, LIC takes the clear win here!
5. Major Plans
Both LIC and HDFC Life have their strengths and weaknesses. While LIC’s reputation still runs its business, HDFC Life takes on the pioneering role as one of the best term insurance providers in the industry on account of its comprehensive term insurance plans and premium operational proficiency.
Now, it all comes down to the product portfolio of the two insurers - their affordability, comprehensiveness, diversity, and customisation offerings. Let’s take a look!
| Term Insurance Providers | Best Term Insurance Plans | |
|---|---|---|
| LIC | LIC's New Tech Term Plan | Pros ₹50 lakhs (minimum) - No specific upper limit Offline-only plan 2 types of death benefits - Level sum assured or Increasing sum assured (you have to choose when you purchase the policy) Discounted premiums for women policyholders Accidental Death Benefit rider available Cons Not affordable Not Comprehensive Only a single rider is offered |
| LIC's New Jeevan Amar Plan | Pros ₹25 lakhs (minimum) - No specific upper limit Online-only plan 2 types of death benefit - Level sum assured or Increasing sum assured (you have to choose when you purchase the policy) Discounted premiums for women policyholders Accidental Death Benefit rider available Cons Not Comprehensive Not affordable Only a single rider is offered |
|
| HDFC Life | Click2Protect Life | Pros Income Benefit on Accidental Disability Rider Coverage option of ₹25 lakhs to ₹2 crores Protect Plus Rider Return of Premium (ROP)I Accidental Death Benefit (ADB) Alteration of premium payment frequency Option to change the Premium Payment Term from Regular Pay to Limited Pay Cons Maximum coverage is capped at ₹2 crores A bit expensive. |
| Click2Protect Super | Pros Return of Premium Waiver of Premium on Total and Permanent Disability Spouse Cover Option Option to alter premium frequency Option to change Premium Payment Term from regular pay to limited pay Renewability Option at Maturity Life Stage Option Death benefit as an instalment option Cons A bit expensive. |
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HDFC Life Insurance vs LIC: What Should You Choose?
HDFC Life is one of the leading private insurers in the country, while LIC is the pioneer in the public sector. Although in most of the metrics, LIC seems to have performed quite well, you will have to remember its long-term industry presence and its sizeable client base. Thus, the comparison against HDFC Life doesn’t stand valid. On the other hand, if you take a look at the term insurance plans from both the insures - it will be quite clear that HDFC, with its comprehensive & heavily customisable plans (albeit a tad bit expensive), should be your choice in the battle between HDFC Life vs LIC.
