Recently, one of our clients approached an advisor and expressed his interest in a term insurance plan. The product had been widely marketed across advertisements, drawing his attention. However, our advisor knew better than just to trust a marketing move. He patiently explained to the client that the life insurance provider he was favouring wasn’t exactly a credible provider across the industry.
The client then asked a question, “How can I determine if a term insurance provider is a good one or not?”
This article is an example of the answer that the advisor offered to the client. For this blog, we have picked out two of the most common names in the life insurance industry - TATA AIA Life Insurance and HDFC Life Insurance. We will now offer a quick comparison of HDFC Life vs Tata AIA to determine which of the two is the more credible one and take a look at the best term insurance policies offered by both these providers.
HDFC Life vs Tata AIA
| ASPECTS | TATA AIA | HDFC Life |
|---|---|---|
| Claim Settlement Ratio (CSR) | 98.53% | 98.69% |
| Amount Settlement Ratio (ASR) | 92.7 | 87.3 |
| Volume of Complaints | 2.3 | 2.7 |
| Average Annual Business (in ₹ crores) | ₹6,014 crores | ₹24,315 crores |
| Major Term Insurance Plans | Sampoorna Raksha Supreme Maha Raksha Supreme |
Click2Protect Life Click2Protect Super |
Heads Up: It takes an average person up to 5 hours to read & analyze a term life policy and 10 hours or more to compare different plans and make a decision.
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HDFC Life vs TATA AIA: Which is Better as a Term Insurance Provider in India?
HDFC Life Insurance began operations in 2000 and now has an average annual business volume of ₹24,315 crores. The insurer is currently one of India's leading private insurance companies. HDFC Life's credibility is well established, making its financial products widely popular in the market.
HDFC Life offers a range of products, including group policies, ULIPs, retirement policies, savings plans, and term insurance policies. The insurer prides itself on its operational proficiency, boasting an industry-high Claim Settlement Ratio, the lowest complaint volume, and an excellent Amount Settlement Ratio. The only drawback is that their plans are slightly more expensive compared to others in the same class. However, the comprehensiveness of their policies outweighs this caveat.
On the other hand, founded in 2001, TATA AIA Life Insurance Co. Ltd. is a joint venture between TATA Sons and AIA. TATA Sons is the largest conglomerate in India, while AIA is one of the largest insurers in the Asia Pacific region. Due to its strong brand equity and diverse, feature-rich product portfolio, TATA AIA Life Insurance Co. Ltd. is a popular choice for term insurance plans. Besides term insurance, the company offers ULIPs, retirement plans, and savings policies. Their products are known for being affordable and customisable, with valuable riders and comprehensive plans. Additionally, the insurer has an excellent reputation as a credible company supported by a solid client base.
With a quick description of the track record of HDFC Life vs Tata AIA Life Insurance done away, now let’s take a look at the metrics that will be used to determine and compare the credibility of TATA AIA Life Insurer and HDFC Life Insurance Company - Claim Settlement Ratio (CSR), Amount Settlement Ratio (ASR), Volume of Complaints, Average Annual Business, and the quality of the best products offered by them.
(Please note: The data entered here is an account of the numbers for the last 3 years. We have drawn an average of these numbers and then compared them to the industry average to get a more thorough look into the consistency of the overall operational proficiency.)
Claim Settlement Ratio (CSR)
If you plan to approach a life insurance provider to get a top-notch term insurance plan, the first step is to check out its claim settlement track record - Claim Settlement Ratio (CSR). This is calculated by -
(The total number of claims settled by an insurer over a year / The total number of claims raised to the insurer over the year) * 100
If you have found an insurer with a CSR of 97 and above, you can stick around and check out its other metrics (that will be discussed in detail below) before finalising. However, if the CSR is less than 80, you should look around for other insurers.
| CSR across the years | TATA AIA | HDFC Life | Industry Average/year |
|---|---|---|---|
| 2020 - 2021 | 98.02% | 98.01% | 97.49% |
| 2021 - 2022 | 98.53% | 98.66% | 97.50% |
| 2022 - 2023 | 99.03% | 99.41% | 98.34% |
| Average of 3 years | 98.53% | 98.69% | 97.74% |
CONCLUSION: Both TATA AIA and HDFC Life insurance meet the threshold of 97, which experts recommend. Thus, they are good to go as your term insurance provider. However, HDFC Life takes the win by a very small margin.
Amount Settlement Ratio (ASR)
The second metric that is taken into account when calculating and gauging a life insurer’s credibility is its Amount Settlement Ratio (ASR, which is given by -
(The total amount used in settling claims by an insurer over a year / The total amount collected via premiums by the insurer over the year) * 100
An ASR is instrumental in analysing the financial sustainability of the term insurance provider. This is crucial, considering that term insurance policies are supposed to be a long-term financial commitment between the insurer and the insured. So, as a policyholder, you would want an insurer that has the financial potential to pay off your death benefit claims in the long run. A life insurance provider with an ASR of 90 and above is golden.
| ASR across the years | TATA AIA | HDFC Life | Industry Average/year |
|---|---|---|---|
| 2019 - 2020 | 95.90% | 92.6 | 90.80% |
| 2020 - 2021 | 87.60% | 80.1 | 91.20% |
| 2021 - 2022 | 94.70% | 89.4 | 90.60% |
| Average of 3 years | 92.70% | 87.3 | 90.90% |
CONCLUSION: TATA AIA Life Insurance Company is the clear winner in the case of ASR, considering that it crosses the pre-decided benchmark of 90 and has stayed more or less consistent across the years. This is a great sign for its existing and potential policyholders.
Volume of Complaints
When opting for a long-term financial product like a term insurance plan crafted to ensure the financial safety of your family’s future, you want an insurer with a stellar record in terms of its overall operation proficiency. To ensure this, you need to look at an insurer's complaint volume. This records the claim settlement experience of the existing policyholders with the insurer, indicating whether the insurer is worth approaching. The lower the complaint volume, the better the overall operational proficiency of the provider, and hence, more points to its credibility.
| Complaint Volume across the years | TATA AIA | HDFC Life | Industry Average/year |
|---|---|---|---|
| 2020 - 2021 | 1 | 3 | 67.6 |
| 2021 - 2022 | 3 | 3 | 76.5 |
| 2022 - 2023 | 3 | 2 | 65.3 |
| Average of 3 years | 2.3 | 2.7 | 72.8 |
CONCLUSION: Both TATA AIA and HDFC Life Insurance Company have incredible complaint volume. However, while HDFC Life’s track records in complaint volume have been consistently improving, that of TATA AIA has increased slightly. And while TATA AIA has won this round by a narrow margin, policyholders (potential and existing) need to keep a close watch on the numbers.
Average Annual Business
Now, the average annual business volume of a term insurance provider isn’t exactly a metric used to gauge the insurer’s credibility; a look into the numbers can help policyholders understand the track record of the provider. You can also analyse if the insurer is a small, medium, or large-sized brand. Accordingly, you can make an informed decision about whether you should approach this life insurance provider or not.
| Average Annual Business across the Years | TATA AIA (in crores) | HDFC Life (in crores) | Industry Average/year (in crores) |
|---|---|---|---|
| 2020 - 2021 | ₹4,143.7 | ₹20,106.6 | ₹12,265.5 |
| 2021 - 2022 | ₹5,358.5 | ₹24,154.8 | ₹13,873.8 |
| 2022 - 2023 | ₹8,540.0 | ₹28,683.1 | ₹17,182.0 |
| Average (2020 - 2023) | ₹6,014 | ₹24,315 | ₹14,204 |
CONCLUSION: Despite having only 1-year advantage over TATA AIA in terms of its commencement, the business volume of HDFC Life is incredibly higher than that of the former. This speaks volumes about the brand reputation that the insurer has built over its enriched product portfolio. This leaves no wonder as to why HDFC Life is a popular choice among policyholders despite its slightly expensive premiums.
Comparison of HDFC and Tata AIA Term Insurance Plans
Overall, TATA AIA Life Insurance and HDFC Life Insurance have impressive data across their CSR, ASR, complaint volume, and annual average business income metrics. However, HDFC Life holds a slight edge over TATA AIA, outperforming it by narrow margins.
Now, let's focus on the term insurance plans they offer, including their pros and cons and the available riders. Here’s a closer look:
| Term Insurance Providers | Best Term Insurance Plans | Pros/Cons |
|---|---|---|
| TATA AIA | Sampoorna Raksha Supreme | Pros: Accidental Death Benefit of up to ₹2 crore Critical Illness Rider covering 40 ailments (offering up to ₹1 crore) Total and Permanent Disability Rider of up to ₹2 crore Hospi Care Benefit of up to ₹40 lakhs Cons: No Waiver of Premium The minimum income eligibility of policyholders is ₹10 lakhs. |
| Maha Raksha Supreme | Pros: Waiver of Premium (In case of critical illness and if diagnosed with total permanent disability) Accidental Death Benefit of up to ₹2 crore Critical Illness Rider covering 40 ailments (offering up to ₹1 crore) Total and Permanent Disability Rider of up to ₹2 crore Hospi Care Benefit of up to ₹40 lakhs Cons: The minimum income is marked at ₹15 lakhs per year |
|
| HDFC Life | Click2Protect Life | Pros: Income Benefit on Accidental Disability Rider Coverage option of ₹25 lakhs to ₹2 crores Critical Illness (CI) Plus Rider Protect Plus Rider Return of Premium (ROP) Waiver of Premium on CI 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: Waiver of Premium on Critical Illness 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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TATA AIA vs HDFC Life Insurance: What Should You Choose?
Now, both TATA AIA Life Insurance and HDFC Life Insurance have decent numbers across their diverse metrics that measure their credibility. But, while term insurance plans from TATA AIA are pocket-friendly and feature-rich, plans from HDFC Life are a tad bit expensive. On the flip side, HDFC Life still remains a favourite, considering its rich product portfolio, while TATA AIA’s slowly developing issues over its operational efficiency have put it on the back foot.
