Today online term insurance plans are available at very low cost. It will cost you even less than your monthly mobile bill. So, if you have not taken life insurance yet it is advisable to go for an online term insurance plan. A term insurance plan provides risk coverage and financial stability to your family in your absence.
Let’s face it, life is unpredictable. One day you’re riding the high tide, and the next, you’re navigating choppy waters. That’s where a solid term insurance plan comes into play. It’s like a safety net that ensures your family’s financial stability if you’re not around. But wait—buying the right term insurance plan online in India can feel like trying to pick the perfect mango from a bustling market. Overwhelming, right? Don’t worry; I’ve got your back. Here’s a detailed, step-by-step guide to making the best decision.
Also Read – Best online Term Insurance in India
What Is a Term Insurance Plan
First things first—let’s demystify term insurance. In simple terms, it’s a pure protection plan. You pay a premium, and in return, your family gets a lump sum amount (known as the sum assured) if something happens to you during the policy term. It’s straightforward, no-frills insurance. Unlike other plans, there’s no investment component here, which is why it’s so affordable.
Why Online Term Insurance policy are less costly
Online term insurance policy is 20-40% less costly compare to offline policy. The reason why there is a big cost difference between online and offline term plans is given below.
- As an online term plan is purchased directly no intermediate agent is involved in between. So you will be saving big money on insurance agent commissions. You may not be aware but the agent takes a 15-20% commission on every insurance payment.
- A mortality risk (unknown or hidden risk) associated with an online term plan is almost zero because people who opt for an online term plan are usually well educated and are expected to take good care of their health so the insurance company is willing to provide them term plan at a lower cost.
- A paperless process further reduction in the overall cost of the policy.
How to Choose the Right Online Term Insurance Plan
Now, this is where the rubber meets the road. With so many options available, how do you pick the one that’s perfect for you? Follow these steps:
1. Assess Your Needs
Before diving into the sea of policies, ask yourself: How much coverage does my family need? A general rule of thumb is to aim for a sum assured that’s at least 10-15 times your annual income. Think about factors like:
- Outstanding loans (home, car, education)
- Future expenses (kids’ education, marriage)
- Daily living costs for your family
2. Compare Policies
Comparison is key. Use trusted insurance comparison websites to analyze:
- Premiums: How much you’ll pay annually
- Claim Settlement Ratio (CSR): A higher CSR indicates the insurer’s reliability
- Riders: Additional benefits like critical illness cover or accidental death benefits
- Policy Tenure: Longer terms provide extended protection
3. Check the Insurer’s Reputation
Don’t just fall for a low premium. Dig deeper. Research the insurer’s credibility by checking:
- Customer reviews
- Solvency ratio (ability to settle claims)
- CSR from IRDAI’s annual report
4. Choose the Right Riders
Riders are like toppings on a pizza—optional but can make a big difference. Popular riders include:
- Critical Illness Rider: Covers major health conditions like cancer or heart attacks
- Accidental Death Rider: Provides an additional payout if death occurs due to an accident
- Waiver of Premium: Waives future premiums if you’re permanently disabled
5. Read the Fine Print
Don’t skim through the policy document like it’s a terms-and-conditions box you’re eager to skip. Pay attention to:
- Exclusions (situations where claims won’t be honored)
- Premium payment terms
- Claim process details
6. Choose the Right Premium Payment Mode
You can pay premiums annually, semi-annually, quarterly, or monthly. Pick a mode that aligns with your cash flow. Annual payments are often cheaper in the long run.
7. Medical Tests and Declarations
Be honest while filling out your health details. Most insurers will require a medical test. It’s better to disclose existing health conditions upfront to avoid claim rejections later.
Best way to purchase online term Insurance plan
You can purchase an online term insurance plan in the following two ways.
- Direct Online Purchase – In this case, you approach the insurance company directly from the insurance company website and purchase the policy online. No agent is involved and the entire process is completely transparent.
- Purchase from Insurance Web Aggregator – You can also purchase an online term insurance plan from an insurance web aggregator. Insurance Web Aggregator is a web portal or search utility approved by IRDA. The insurance aggregator website provides you the facility to compare several insurance policies and helps you to get the best deal. In this process also no agent is involved and the entire process is transparent.
Steps to Buy a Term Insurance Plan Online
Here’s a simple roadmap:
- Visit the Insurer’s Website: Choose a trusted insurer and head to their official website.
- Use the Premium Calculator: Enter details like your age, income, and required sum assured to get a premium estimate.
- Fill in the Proposal Form: Provide personal, occupational, and health details accurately.
- Upload Documents: Typically, you’ll need to upload your ID proof, address proof, and income proof.
- Schedule Medical Tests: If required, the insurer will schedule a medical check-up.
- Make Payment: Pay the premium online via net banking, credit card, or UPI.
- Receive Policy Document: Once approved, you’ll get the policy document via email.
Mistakes to Avoid While Buying Term Insurance Online
Even seasoned buyers can stumble. Here are some common pitfalls to sidestep:
- Underestimating Coverage Needs: Don’t skimp on the sum assured to save a few bucks.
- Ignoring Inflation: Factor in rising costs when choosing the policy tenure and coverage.
- Skipping Riders: Missing out on crucial riders could limit your coverage.
- Providing Inaccurate Information: This can lead to claim rejection when your family needs it most.
- Delaying Purchase: The younger you are, the lower the premium. Procrastination can cost you dearly.
Benefits of Buying Term Insurance Early
Still on the fence? Here’s why starting early is a no-brainer:
- Lower Premiums: Age is a significant factor in premium calculation. Younger buyers pay less.
- Longer Policy Tenure: Lock in coverage for a longer period.
- Better Health Conditions: No pre-existing illnesses mean smoother approvals.
- Peace of Mind: Start protecting your family’s future ASAP.
Over to You –
An online term plan offers you multiple benefits including cost savings. So, always purchase a term insurance policy online. You should keep certain important factors in mind before purchasing a term plan such as sum assured, income, future expense, riders, etc.
In order to help you here is a comparison chart of Best Term Insurance Policy.
Remember – Buying a term plan is an important decision in your life. Be cautious and purchase the best term insurance policy based on your requirement.
Ravi Sir,
i am 30 years, recently married and work for an IT firm. I plan to take a insurance for about 20 years which will roughly double the amount
what would u recommend, term or insurance? also which company is good
Dear Ramu,
You should buy a Term plan. Please look at ICICI iProtect Smart or HDFC Click2protect plus.
Dear sir,
is it better to taken endowment or term? pls advise me
thanks in advance
I have heard that buying term plan online is bad because at the time of claim, the survivor has to run around for getting the claim settled. But if you buy through agent, they manage the entire process for you. Is that true? Which companies are notorious for poor record when it omes to claims settlement and survivor harassment?
You are absolutely wrong.You can refer to claim settlement ratio. In addition to that please note that as per IRDA rule Life Insurance Company can not reject Insurance claim after 3 years.
Sir,
My sister is a divorcee & having a daughter. She is doing some small time job instead of sitting in home. Can you suggest A Term Insurance Plan or any other insurance plan for Single mother, So that it will be a support for her daughter in future.
Thanks in Advance…
How important is the claim settlement ratio when selecting an online term plan? As per the IRDAI table, LIC is at top, Max Life is at 2nd position with 96+%. What should be the minimum claim settlement ratio to make that plan a good plan?
Hello Prashant,
Very good question.A claim settlement ratio is one of the factors in rating insurance companies. Higher the claim settlement ratio means insurance company is trustworthy and reliable, whereas the low ratio indicates that the insurance company is less reliable in the claim settlement.Use claim settlement ratio as one of the factors while buying an insurance policy. CSR should not be the only factor for deciding Life Insurance Company.
There is no thumb rule in deciding good plan based on claim settlement ratio.However, as per me CSR should be 90% or above.
Under Section 45 of the Insurance Laws (Amendment) Ordinance, As per the Section 45 of the Insurance Laws (Amendment) Ordinance, no policy can be called into question after three years of it being into force.This means, the insurer has a three-year window to reject claims on grounds of any mis-statement or fraud.This rule was made to reduce industry-wide losses due to fake claims. CSR is still important in a manner that if death take place within 3 years from date of taking policy claim can be rejected. CSR one of the last factor to consider while buying insurance policy.