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A Quick Guide to Buying Life Insurance Online

Life Insurance Policy is an agreement and a promise between two parties - the insurer and the insured. An individual pays a premium to secure his life and finances against his death, illness, or disability, providing financial stability to his loved ones if he is not around.

By accepting the premium, the insurer gets into the agreement and covers the insured against financial losses that may occur out of his death or any serious contingency.

What is Online Life Insurance Policy?

This is a smart way of buying a Life cover with added advantages of a higher sum assured along with a lower premium to be paid. There are many benefits of buying an online insurance policy taking into consideration the umpteen hassles one may go through by physically contacting agents and brokers, paying extra for the policy, and not getting complete information of the product they are interested in buying.

With Tax benefits under section 80 C, 80D, and Section 10 of the Indian Income Tax Act 1961, an online policy offers transparency, flexibility, and accessibility to a myriad of companies and options, making the individual the boss to compare every policy and eventually settle for the best.

Process of buying an online life insurance

The most convenient and cost-effective way of buying a life cover is to purchase it online, which offers benefits of comparison among policies, analysis, and decision making. The simple process needs to be followed for the same:

  • Application form to be duly filled in
  • Relevant and correct details to be furnished
  • Pay the premium online
  • Issuance of policy – soft copy is immediately mailed or messaged to the customer.
  • Documents required to purchase the policy
Income Certificate Address Proof Identity Proof Date of Birth Proof Other documents
Salary certificate Voter card Aadhar Card Birth certificate KYC documents like a declaration form
ITR for 3 years Aadhar card Passport Marriage certificate disclaimer
Salary slips of three or six months Passbook of 6 months License Matriculation of mark sheet of class X Terms and conditions
CA certificate for self-employed individuals Saving account bank statement PAN Card Aadhar Card Policy Proposal
Form 16 Passport PAN Card Passport Certified affidavits
Ration card with photograph Passport License marriage women’s property act document
License PAN Card
Affidavit certified by a gazetted officer.

Features and Benefits of an Online Life Insurance Policy

India is a tech-savvy country, and with the immense growth in the e-commerce field, many prefer to invest in a life insurance policy after doing thorough scrutiny of available policies online using technology and settling for the best as per their individual needs.

  • Purchasing benefits with a low premium and high sum assured
  • An informed deal about the relevance, features, offers, and benefits of insurance policies
  • Reviews and ratings of the insurance company help decide the credibility and goodwill of each of them
  • Automated services like purchase, renewal and claim process make online buying of policies very popular
  • Promptness, accessibility, and swiftness
  • Comparison of policies wherein important features can be compared against the other policies and the best one as per individual needs can be bought
  • Saves time, effort, and money
  • Security of Policy documents as it is instantly shared with the customer and a soft copy is maintained unlike the fear of losing a hard copy or a physical insurance policy document
  • No intermediary or no agent involved so no hidden information, facts about each policy are revealed, and the cost incurred for the agent is eliminated
  • 24*7 customer service support

Difference between Online and Offline Policy

Parameters Online Policy Offline Policy
Cost Factor Reduced cost - offering lower premium and higher sum assured More expensive due to the agent’s cost merged in the policy cost.
Comparison Religious comparison between various policies of innumerable insurance companies can be made The agent will explain only the details of the company he is employed with and will not give out any other insurance company information.
Transparency 100% transparency as all details availed in the features segment Disadvantages, cons, and other issues regarding the policy are not revealed many times. Complete honesty cannot be expected.
Informed Insurance Decision Yes No
Ease of access It can be done anytime, anywhere and within the comforts of one’s space Formal meeting needs to be conducted
Brand accessibility Yes Yes
No Fraud e-transactions could invite fraudulence Higher risk of fraud
Flexibility Changes can be made as per the choice of the customer Once bought, it cannot be changed.
Policy Reviews Original reviews, rankings, and ratings can be checked and confirmed No
Claim Settlement Ratio and Incurred Claims Ration CSR and ICR can be compared amongst various insurance companies as everything is available online. These are also the two main categories to look for when buying an insurance policy Only about the concerned company
No room for errors in form filling There can be errors Professional expertise, errors can be avoided.
Rider benefits No Yes
Professional support No Yes
Safer payments Yes No
Convenience Yes Yes
Mis-selling No Yes
Accuracy of information Yes No

Things to avoid while purchasing an online Life Insurance Policy

Here is a rundown to the things that you should avoid when buying a life insurance policy online:

  • Customer should not get unduly attracted to the luring abilities and covers, which could be huge and unnecessary for him
  • Poor research and unfavourable findings on the internet, which has a vast database, can be detrimental for the customer who is investing his money on it
  • Poor form filling can lead to claim issues or other policy related hurdles that should be avoided
  • Inaccurate information like wrong address, wrong date of birth can also term the policy null and void in a few cases. It could also be tiresome to make relevant changes to correct the information as stringent documentation is required to change the policy's essential details
  • The customer continually ignores the long tenure of buying the policy, and the insurance companies play on this by giving them other attractive offers. This is an essential feature that must be checked by the individual

Drawbacks of online life insurance

Although it’s a win-win situation, it comes with a few roadblocks and hurdles. Some of the drawbacks of buying online life insurance are as follows:

  • Pre-set life insurance plans are available on the internet. It is easy to buy a policy with fixed features, but it becomes difficult to customize these plans
  • Buying additional riders like accidental, critical illness, and disability riders may get complicated and expensive. There are not too many options available on the internet
  • Guidance and professional expertise of an agent are missing who can answer questions and help people who are entirely new in buying insurance
  • Form filling errors can be avoided with the help of an agent’s guidance, whereas there is a higher scope of making mistakes while filling an online form
  • Online claim procedure, if not prompt, could be troublesome, which also requires a lot of follow-ups. The policyholder may not find the time or make the effort of resolving claim related issues
  • Another drawback of looking up for life insurance policies online is if the portals are updated and upgraded as per the Latest Changes in case of old information displayed on the insurer's portal
  • E-transactions could be risky if there is a network connectivity issue. There also exists the danger of e-fraud, where someone can hack vital information regarding a person’s financials 

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