A reader asks:

I am shopping for a term insurance plan and am a bit confused. Having seen the travails of insurance companies such as AIG et al., I am inclined to go with the Life Insurance Corporation of India (LIC) given their sovereign guarantee. But LIC’s premium for term plans seems to be 40-50% higher than those from private insurance companies. Plus, LIC doesn’t offer any riders (e.g. Accident Death Benefit, Disability, Critical Illness, etc.).

I am also not sure about the claims process of various insurance companies. How easy or difficult is it for survivors to claim insurance benefit from these companies? What use is it having an insurance policy when your loved ones have to run from pillar to post to claim the proceeds? What has been your readers’ experience in this area?

I do not have enough experience with claiming life insurance proceeds. We’ve only claimed life insurance once from LIC — but this was nearly a decade ago and the policy proceeds weren’t substantial to begin with. I’ve tried purchasing a term insurance plan from LIC in the recent past, but the agent and the TPA (Third Party Administrators) managed to royally screw things up and my policy proposal was finally declined with the status “accepted but can’t be issued because the agent’s agency has been terminated.” I’ve resolved to never again use an agent for any financial purpose.

But, what has your experience been? Which life insurance company offers a hassle-free experience?