Tips to Buy Online Term Plans

Last Updated: May 18, 2017 | 796 Views

Buying a life insurance plan has never been this easy. For the net savvy investors of today, insurance companies offer life insurance plans that are exclusively available online. These online insurance plans are easy to buy and a sure shot value for money. So you no longer need to depend on insurance agents or wealth managers.  You could get yourself a life cover at the click of the mouse. 

What are Online Insurance Plans

Online insurance plans, or sometimes also known as E- insurance plans are pure term plans that could be bought online only. These plans are characterized by much lower premiums. You could expect insurance companies to offer you a life cover of Rs. 1 crore with premiums ranging between Rs. 7000 to 8000 annually. All you need to do is submit your application for the insurance plan online though the insurers secure web portal. The entire process thus works out to be quick and hassle free.  

Online Term Plans versus Regular Term Plans

Online term plans are no different in their functioning or benefits when compared to term plans brought traditionally. Both offer a life cover for a pre-defined term. The difference lies in the application process. Buying an online plan though, comes with its own set of advantages.

  • Ease of investment: Investing in online insurance policies is hassle free. No lengthy forms to fill in. The web interface of insurers is user friendly and keying in requisite information is easy. Many portals not only calculate the premium but also help you determine your suitable sum assured. So with the absence of any agents, you could now get yourself a life cover from the comforts of your home or office at any convenient time.
  • The cost advantage: The absence of insurance agents and distribution costs reduces the costs associated with these plans. You could expect the premiums of these plans to be close to 40 to 50% lesser than other term plans. So you get a much higher insurance cover for the price you pay.
  • Quick buying process: The entire process of application takes around 15 to 20 minutes. You make your payments online too.
  • Special discounts for women and non tobacco users: Most insurers offer an additional discount for women applicants and those who do not smoke.
  • No medical examination for applicants below 45 years of age: This benefit could vary from insurer to insurer or on the general health condition of the individual.

Buying Online Plans

Online term plans are a convinient way to protect yourself. To ensure a smooth buying process and to ensure you have the right cover, here is what you need to do. 

Before you buy…

Assess your needs: Just like in purchase of any insurance plan, the first and most vital step is to assess your insurance needs. A very basic thumb rule is having a life cover of around 5-6 times your annual income. The more sophisticated method is to use the Human Life approach that considers your family’s current and future requirements, your goals and inflation factors.
Tenure of Policy: You would also have to decide on the period or term of cover you want to be protected. It is advisable to have a life cover till your earning years or till your life goals are fulfilled.

Going online

Keying in the right information: The online portal of the insurer would require you to fill in key information such as personal details, PAN, contact info, nominee details, and medical and general health conditions. It is vital to provide accurate and correct information. By misrepresenting facts you may end up saving money on your premium; however your family may have to pay a heavy price if your claim were to get rejected. The details you enter are scrutinized very closely and missing out on critical information may also result in your policy getting rejected.

Making online payments: Once your details are collected, the website calculates your annual premium. Payments could be made through net banking or through credit card.

Take care of security: Like all online transactions ensure the website your transacting is genuine. Look out for the secure SSL signature on your browser window. Keep a screenshot of your final transaction page as in case of any system hang-ups you still have details of your transaction.

Post purchase

Submission of documents: Though your purchase is online, you would be required to submit your documents to the insurer. KYC formalities for proof of identity, income and PAN are to be submitted. Most insurance companies send their representative to collect the same.

Medical Tests: You may also require a medical examination if you are older than 45 years old or if there is a large sum assured. However, this varies from insurer to insurer.

Period review: Your responsibility does not end with buying a policy. Periodic review of policy is required to ensure your protection is adequate and in tune with your life>.

Deepak Yohannan
Deepak Yohannan is the CEO of MyInsuranceClub. He enjoys writing on Personal Finance and contributes regularly on sites like Reuters & Moneycontrol. He is a strong proponent of online insurance and is often found pointlessly babbling about it!