Prices Increasing soon Prices Increasing Soon

Solvency Ratio in Term Life Insurance

Term insurance, a pure and simple life insurance product helps to protect your loved one’s financial stability in case of an unforeseen event. So, choose an insurer with care and after in-depth research. While buying term insurance from any company, you should ensure that your insurance company is reputable, trustworthy, and will offer financial help to your family in emergencies. 

Read more
Gets ₹1 Cr. Life Cover at just
COVID-19 Covered
The Policybazaar Advantage
Dedicated claim support for family FREE
Upto 10% discount for buying online
Only certified experts will call you on 100% recorded lines
We are rated~
rating
6.7 Crore
Registered Consumers
51
Insurance Partners
3.4 Crore
Policies Sold

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

By clicking on "View plans" you agree to our Privacy Policy and Terms of use

~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

Life is Unpredictable! Protect your family’s future
Get ₹1 Crore Life cover starting from ₹384/month+
+91
Secure
We don’t spam
Check Your Premium Now
Please wait. We Are Processing..
Get Updates on WhatsApp
The Policybazaar Advantage
Policybazaar Advantage Icon
Dedicated claim support for family FREE
Policybazaar team will help and support you at the time of claim. A personal claim handler from our team of experts will get in touch with you when your nominee applies for a claim on our website.
Policybazaar Advantage Icon
100% calls recorded to ensure no mis-selling
We will make sure you get what is promised by the advisors. We conduct regular monitoring of our calls to make sure you get the best experience.
Policybazaar Advantage Icon
Exclusive lifetime discount upto 5% for buying online
The discounts will be valid for the entire policy payment term and is not available if you choose to buy the insurance through offline agents.
Policybazaar Advantage Icon
Advisors available in your city
Our advisors are available in more than 55 cities across India and can help you at your doorstep in understanding the plans and in documentation.
Policybazaar Advantage Icon
Refund at the click of a button
In case you aren’t happy with your purchase, you can cancel your policy hassle-free at the click of a button. We will help you with the cancellation and refund of your policy.

Keeping all the factors in mind, one of the major parameters to consider is the Solvency Ratio of Term Life Insurance Companies. Let’s discuss why this factor matters and how this ratio helps in choosing the right insurer.

one crore term plan
plus

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 16/day+

₹50
LAKH

Life Cover

@ Starting from ₹ 8/day+

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day+

What is a Solvency Ratio of Term Insurance Companies in India?

The Solvency Ratio measures the cash flow of the company and the insurer’s liabilities. Simply put, it helps you determine whether or not the insurer has sufficient funds to manage its short-and long-term liabilities.

A low solvency ratio simply means that the insurer finds it difficult to manage default payments and financial obligations. On the contrary, if the solvency ratio of a company is high, the insurer has sufficient funds to manage its financial commitments. This means, high solvency ratio usually indicates that the company is financially stable and has adequate capital to pay all the applicable claims.

Let’s understand this with the help of an example:

Raj purchased a term insurance plan from X insurer. The company promises to pay a pre-specified amount to his/her nominee in case of an unforeseen event. Now, just consider the case of a natural disaster like flood, earthquake, tsunami, etc. Because of these events, the company may face a high number of death claims than expected.

In such cases, the ability of the company to settle the death claims purely depends on its financial ability or solvency. So, the solvency of an insurance company shows its financial health/ability to meet its long-term debt obligations.

Note: Know what is term insurance first and then buy a term plan for your loved ones.

one crore term plan

Secure Your Family Future Today

₹1 CRORE

Term Plan Starting @ ₹449/month+

Get an online discount of upto 10%+

Compare 40+ plans from 15 Insurers

+Standard T&C Applied

How To Calculate Solvency Ratio?

The formula for the Solvency Ratio is:

Solvency Ratio = (Total Income + Depreciation) / Liabilities

The formula for solvency ratio measures the cash flow of a company in comparison to the money it owes as the total sum assured. The more the assets are against the liabilities, the high is the solvency ratio will be.

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.

Why Solvency Ratio of Term Life Insurers is Important?

Term insurance protects the financial future of your loved ones. By buying a term insurance plan, you as a policyholder promise to pay the premium amounts on time. Then, in return, the insurer provides you a life cover that helps secures your family’s future. In case of your unforeseen death, the insurance company will pay the sum assured amount to the beneficiary/nominee of the policy.

However, term life insurance companies receive several claims from their customers regularly. So, the company needs to be financially stable and have enough funds to process all the death claims and pay the financial benefit to the nominees.

As discussed, the Solvency Ratio helps in knowing the financial strength of the company, whether it is good or bad. Thus, to secure your loved ones and ensure that the sum assured amount will be paid in difficult times, you should look for insurers having a high solvency ratio.

What is IRDAI Mandate on Solvency Ratio?

Now as we all know that Solvency Ratio is a crucial factor to take care of when choosing a term insurance company. IRDAI has made it compulsory for all insurance companies to have at least a 1.5 solvency ratio and a 150% of solvency ratio margin**.

The solvency ratio of all life insurance companies can be closely tracked by IRDAI. Detailed information can be easily found on the IRDAI’s official website.

**Note: Solvency margin is the additional capital the insurers should hold over and above the amounts of death claims they are possible to incur. It functions as financial support in extreme cases, allowing the insurer to settle all death claims.

IRDAI publishes the solvency ratio every quarter i.e., in June, September, December, and March.

Solvency Ratio of Life Insurers as per IRDAI Annual Report 2020-21
Term Life Insurance Company June 2020 Sep 2020 Dec 2020 March 2021
Aditya Birla Sun Life 1.83 1.76 1.70 1.80
Aegon Life Insurance 2.34 2.92 2.68 2.41
Ageas Federal Life Insurance 3.29 3.32 3.48 3.40
Aviva Life Insurance 2.48 2.42 2.50 2.24
Bajaj Allianz Life Insurance 7.60 7.30 7.08 6.66
Bharti AXA Life Insurance 1.95 1.76 1.84 1.78
Canara HSBC OBC Life Insurance 3.49 3.12 2.89 3.27
Edelweiss Tokio Life Insurance 2.39 2.16 2.19 2.15
Exide Life Insurance 2.13 2.16 2.17 2.24
Future Generali Life Insurance 1.72 1.56 1.60 2.03
HDFC Life Insurance 1.90 2.03 2.02 2.01
ICICI Prudential Life Insurance 2.05 2.06 2.26 2.17
IndiaFirst Life Insurance 1.80 1.78 1.67 1.81
Kotak Mahindra 3 3 3.01 2.90
Max Life Insurance 2.12 2.07 2.06 2.02
PNB MetLife 2.04 1.97 1.94 1.90
Pramerica Life Insurance 3.87 4.20 4.29 4.42
Reliance Nippon Life Insurance 2.07 2.14 2.46 2.45
Sahara India Life Insurance 9.33 9 8.85 9.26
SBI Life Insurance 2.39 2.45 2.34 2.15
Shriram Life Insurance 2.09 2.18 1.95 1.80
Star Union Dai-ichi Life Insurance 2.53 2.37 2.27 2.06
Tata AIA Life Insurance 2.14 1.98 2.05 2.04
LIC 1.60 1.65 1.64 1.76

Wrapping It Up!

If you are searching for a best-term insurance company in India, always check the solvency ratio on the insurer’s or IRDAI’s official website to make an informed decision.

Note: Check out the best term insurance plan in India and choose one that suits your requirements.


Premium By Age

Term insurance articles

  • Recent Article
  • Popular Articles
07 May 2024

Term Insurance for 45K Salary Individuals

In life, unpredictability looms large, and while you may

Read more
07 May 2024

Term Insurance for 30K Salary Individuals

Turning your dreams into reality, like owning your home and car

Read more
11 Apr 2024

Government Term Insurance Schemes 2024

The Government of India is committed to the welfare and

Read more
03 Apr 2024

How Policybazaar Helps With Dedicated Claim Assistance

Mr. Kumar has been working with a Public sector bank in Delhi.

Read more
19 Mar 2024

Kotak Term Insurance Login

Kotak Life Insurance is one of the leading insurers offering a

Read more
20 Aug 2014

Term Insurance for Women in India

Term insurance for women is a type of life insurance specifically designed for fulfilling women’s needs and

Read more
03 Dec 2020

What Is Saral Jeevan Bima

Saral Jeevan Bima (SJB) is a simple term insurance plan that offers financial protection for policyholder’s

Read more
13 Apr 2021

2 Crore Term Insurance Plan

2 Crore term insurance provides cover amount of 2 Crore as death benefit to your family in the event of your

Read more
07 Mar 2023

TATA AIA Smart Sampoorna Raksha Param Rakshak Plus

TATA AIA Smart Sampoorna Raksha Param Rakshak Plus is a comprehensive life insurance policy for individuals

Read more
20 Sep 2021

Term Insurance for Diabetics

A lot of people suffer from diabetes in India and one of the most common challenges they face is getting suitable

Read more
Need Help? Request Callback
top
View Plans
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL