Should I buy SBI term insurance or LIC

Should You Buy SBI Term Insurance or LIC? A Comprehensive Guide for 2025

Securing your family’s financial future is a critical step in life planning, and term insurance offers a cost-effective way to ensure their stability in your absence. With its high coverage and low premiums, it’s a pure protection product, free from the complexities of investment-linked plans. In India, two giants dominate the insurance landscape: SBI Life Insurance and Life Insurance Corporation of India (LIC). Choosing between them requires weighing their strengths, from reliability to affordability. This detailed guide, based on the latest 2025 data, compares SBI Life and LIC term insurance plans to help you make an informed choice. We’ll explore their claim settlement ratios, premium costs, plan features, customer service, and more, ensuring you have the insights needed to pick the best option for your needs.

Why Term Insurance Matters

Term insurance is a straightforward contract: you pay regular premiums, and if you pass away during the policy term, your nominees receive a substantial sum assured. Unlike endowment or ULIP plans, it offers no maturity benefits or returns, keeping costs low while providing high coverage. This makes it ideal for covering major expenses like home loans, children’s education, or daily living costs. In India’s dynamic financial market, term insurance is a cornerstone for young professionals and families looking to safeguard against uncertainties.

SBI Life, a leading private insurer backed by the State Bank of India and BNP Paribas Cardif, is known for its innovative, tech-driven approach. LIC, a government-backed titan, has built unmatched trust since 1956 with its vast reach and reliability. Both operate under the Insurance Regulatory and Development Authority of India (IRDAI), ensuring policyholder protection. But which one suits you better? Let’s dive into the comparison.

SBI Life Insurance: The Modern Contender

Since its inception in 2001, SBI Life has risen to prominence as a top private insurer, managing assets worth over ₹3 lakh crore in 2025. Leveraging SBI’s extensive banking network and a robust digital platform, it serves millions with customer-centric products. Its term insurance plans, such as the flagship eShield Next, are tailored for flexibility and affordability, making them popular among urban, tech-savvy buyers. SBI Life’s focus on efficiency and innovation positions it as a strong choice for those seeking value and convenience.

LIC of India: The Trusted Legacy

LIC, established in 1956, is India’s largest insurer, with an Assets Under Management (AUM) exceeding ₹50 lakh crore and a market share of around 60%. Its government backing and extensive network of over 2,000 branches and millions of agents make it accessible even in remote areas. LIC’s term plans, like Digi Term and Jeevan Amar, emphasize simplicity and dependability, appealing to those who prioritize trust and stability. While its digital adoption lags behind private players, LIC’s legacy and reach remain unmatched.

Key Factors to Compare

To choose the right term insurance, let’s evaluate SBI Life and LIC across critical parameters based on 2025 data.

1. Claim Settlement Ratio (CSR)

The CSR indicates how reliably an insurer pays out claims, measured as the percentage of claims settled in a financial year. A higher ratio means greater assurance for your family.

• SBI Life: For FY 2023-24, SBI Life achieved a stellar CSR of 99.20%, with 98.99% of claims settled within 30 days, showcasing efficient processing and minimal rejections.
• LIC: LIC’s CSR ranged from 96.42% to 98.15%, solid but slightly lower, likely due to its high claim volume (over 799,612 claims processed). The industry average was 96.82%.

SBI Life’s higher CSR gives it an edge for those prioritizing quick and reliable payouts.

2. Premium Affordability

Premiums determine the cost of your coverage, varying based on age, health, sum assured, and policy term.

• SBI Life: Plans like eShield Next are competitively priced. For a 30-year-old non-smoker male seeking ₹1 crore coverage for 30 years, premiums start at approximately ₹8,000-₹10,000 annually, thanks to advanced risk assessment.
• LIC: Plans like Digi Term or Jeevan Amar range from ₹9,000-₹12,000 for similar coverage. LIC’s limited premium payment options can lower long-term costs, but its base premiums are often higher.

SBI Life typically offers better value for high coverage, especially for younger buyers. Use online calculators for personalized quotes, as riders and health factors can influence costs.

3. Plan Features and Flexibility

The right plan should align with your financial goals, offering flexibility and relevant features.

• SBI Life:
  • eShield Next: Offers increasing cover (up to 10% annually from the 6th year to counter inflation), whole life coverage up to age 100, and a return-of-premium option.
  • Smart Lifetime Saver: Provides long-term protection with optional income benefits for dependents.
  • Eligibility: Ages 18-60, terms up to 40 years.
• LIC:
  • Digi Term: An online-only plan with level or increasing cover and flexible payouts (lumpsum or installments).
  • Jeevan Kiran: A non-participating plan with return of premiums on survival, ideal for conservative buyers.
  • Yuva Term: Targets young buyers with affordable rates and flexible terms.
  • Eligibility: Ages 18-65, terms up to 40 years.

SBI Life’s plans are more dynamic, with features like auto-increasing cover, while LIC’s are simpler, catering to those who prefer straightforward options with maturity benefits.

4. Riders for Enhanced Protection

Riders allow you to customize your policy for specific risks.

• SBI Life: Offers accidental death benefits, critical illness coverage (up to 50 illnesses), premium waivers for disability, and terminal illness accelerators. These are versatile and cost-effective.
• LIC: Provides accidental death and disability riders, critical illness cover (fewer illnesses), and premium waivers. Its options are less extensive and may cost more.

SBI Life’s broader rider selection makes it better for tailoring coverage to health or lifestyle risks.

5. Customer Service and Accessibility

Your experience with the insurer, from purchase to claims, is crucial.

• SBI Life: Shines in digital services with app-based policy management, instant quotes, and 24/7 chat support. Its online claim process is fast, earning high customer satisfaction.
• LIC: Excels in traditional service with its vast branch network and agent support, ideal for rural areas or those preferring in-person guidance. Its digital portal, while improving, is slower than SBI Life’s.

Tech-savvy buyers will prefer SBI Life’s seamless digital experience, while LIC suits those valuing personal interaction.

6. Financial Stability

The solvency ratio measures an insurer’s ability to meet long-term obligations (IRDAI requires at least 1.5).

• SBI Life: Around 2.15 in 2025, reflecting strong financial health.
• LIC: Approximately 2.11, bolstered by government backing for added security.

Both are financially robust, but LIC’s public-sector status may appeal to risk-averse buyers.

Insights from 2025 Discussions

Online conversations in 2025 highlight distinct preferences. On platforms like Reddit, SBI Life is praised for its high CSR, lower premiums, and innovative features like eShield Next’s increasing cover. Social media posts emphasize its appeal for young professionals. LIC, however, retains strong loyalty for its trustworthiness and accessibility, with some noting its expanded group coverage in FY25. Critics of LIC often focus on its non-term products, which offer lower returns, recommending a term plan plus mutual fund approach for better value. Private insurers like SBI Life are increasingly favored for term insurance due to their agility and customer focus.

Which Should You Choose?

Choosing between SBI Life and LIC depends on your priorities. If you value affordability, innovative features, and a top-tier claim settlement ratio, SBI Life’s plans, particularly eShield Next, are a strong fit. They’re ideal for urban, digitally inclined buyers who want coverage that adapts to inflation. Conversely, if government-backed reliability, widespread accessibility, and simple plans with agent support are your priorities, LIC’s Digi Term or Jeevan Kiran are excellent choices, especially in rural areas or for those who prefer traditional service.

For optimal protection, aim for a sum assured of 10-15 times your annual income. Compare quotes using online tools, consider your health and lifestyle, and consult a financial advisor for tailored advice. Avoid bundling term insurance with investment products to maximize value. In 2025’s competitive market, SBI Life’s modern approach gives it a slight edge for cost-conscious, feature-focused buyers, while LIC remains a dependable choice for trust and reach.

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