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Why Online Term Insurance Plans are Inexpensive

Term insurance is one of the most affordable life insurance policies inviting a very low premium and offering a high sum assured by the insurance company in the absence of the policyholder to provide financial stability and a decent lifestyle to the insured’s family members and dependents.

There are many ways to buy a term insurances plan:

  • Through an agent or a professional from an insurance company.
  • By visiting the local branch of an insurance company.

The above options are offline Term Insurance Plans but come with the disadvantages of paying the broker his fees, which is added to the insured's annual premium. Also, other deterrents like investing a lot of time, money, and effort and getting plan information about only one company at a time could be unfavourable for the investor.

On the other hand, an online Term Insurance Policy gives the benefit of buying a lucrative and strategic term insurance plan by a click and going maximum advantage out of it.

Reasons why Buying Online Term Insurance is Inexpensive

A few reasons why buying online term plan is inexpensive and better for an individual:

  • Low Premium

    The insured gets the benefit of paying the simple amount of premium that is decided by the insurance company without getting the fee, commission, and other expenses added onto it, which is payable to a middleman. A hiked processing fee and intermediary costs of the agent which are payable by the insured towards the company are eliminated, making them 30-40% cheaper than buying an offline policy.

  • Sum Assured is Higher

    Keeping the same benefit into consideration, the insured is offered a higher sum insured as compared to an offline policy, so here also it is an inexpensive option with a better output in terms of claims for an online term policy buyer.

  • No Influence of the Agent

    The individual is not influenced by personal likes and dislikes, which involve a financial benefit to him personally while buying an online term policy. The Policyholder is the best judge and can buy a term insurance plan as per his individual needs and demands without getting distracted and prompted.

  • Accidental Death Benefit

    Some of the plans also offer Accidental Death Benefit under the plan variation of Protect Plus. Under this, if the insured does not survive until the maturity date of the policy, then 100% of the Assured Sum is paid to the beneficiary or the entitled nominee

  • Eliminates Fraud

    The dependency on a person and the stake and risk of handing over money to an agent is eliminated. Instead, direct payment is made toward the insurance company, and the money is secure without any contingency of fraud or loss.

  • Claim Settlement is Higher

    This is one important criterion that is normally skipped if an offline policy is bought. The agent of a particular insurance company would never divulge the actual claim settlement ration or the incurred claims ratio of that particular plan to the client. Neither would he indulge in revealing the ratios of other companies and plans to the individual, which eventually may lead him to a loss.  While buying an online term insurance plan, an individual must compare the CSR and the ICR of every insurance company and the various plans offered by them and settle down with the one offering the highest ratio of claim settlements and incurred claims. This will be an added financial advantage to an online term insurance policyholder.

  • Other Advantages

    There are other advantages like proper scrutiny of various plans, the flexibility of choosing the right insurance company, and the right plan as per his individual needs and benefit of transparency and convenience while buying an online term insurance plan.

Things to Avoid while Buying an Online Term Insurance Plan

With the advantages, one must also not get carried away by the lucrative deals offered online and must be diligent while deciding on the best plan or policy to buy a term plan. To make it further inexpensive and avoid falling into enticing insurance companies, an individual must take the following points into account:

  • Buy Only What is Required

    Going overboard with a sum insured and premium and getting attracted to the umpteen benefits of a specific plan without paying heed to the budget could get expensive for the policyholder. He should only stick to his individual and family needs and buy only what is required and essential. Poor research or poor choice of an insurance plan can eventually lead to financial hurdles and a poor investment.

  • Inaccuracy

    Because the individual is the sole decision-maker without any professional expertise while buying an online term insurance policy, he must be analytical and knowledgeable about various factors before he pins down to one policy. Inaccuracy in gaining knowledge and inaccuracy in filling out details and entering useful information can cause issues later. 

  • Online Fraud

    One must delve into online term insurance policies very carefully, which means not to get into websites that are not authorized or not to reveal the financial information like his bank or card details online to any website. There could be hackers online trying to keep a tab on the online payments or inappropriate websites that save important information about the policyholder, which can be misused later.

Some of the Online Term Insurance offered in India:
 
Term Plans of Insurance Companies Min and Max Entry Age Maturity Age Policy Term Sum Assured Claim settlement Ratio
AEGON Life iTerm Plan 18 – 65 years old 75 years 5-40 years up to 75 years Rs 10,00,000       97.11%
Bajaj Allianz, I Secure 18 – 60 years old 70 years 10,15,20,25,30 years Rs. 25,00,000 for normal category Rs. 20,00,000 for smokers               91.67%
BSLI Protect@Ease 18 – 55 years old 80 years 5-30 years Rs 50,00,000       94.69%
HDFC Life Click2Protect Plus 18 – 65 years old 75 years 10-40 years Rs 25,00,000       97.62 %
ICICI Prudential iProtect Smart plan 18 – 65 years old 75 years 5-40 years Subject to the paid amount of minimum premium 96.68%
Kotak preferred EPlan 18 – 65 years old 75 years 10-40 years Rs 25,00,000       91.24 %
LICS e-term 18 – 60 years old 75 years 10-35 years Rs. 25,00,000 for normal category Rs. 50,00,000 for Non-smokers 98.31%
Maxlife Online term plan 18 – 60 years old 70 years 10-35 years Rs 25,00,000       97.81%
PNB MetLife Mera Term Plan 18 – 65 years old 75 years 10 – 40 years Rs 10,00,000       87.14%
TATA AIA iRaksha Supreme 18 – 70 years old 80 years 10-40 years Rs 50,00,000       96.01%
Disclaimer: Paisawiki does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
 
Some of the Offline Term Insurance offered in India:
Term Plans Min and Max-Age of entry Policy Term Sum Assured Payout type Riders available
CSC Suraksha Plan by HDFC Life 18-55 years 5-15 years Rs. 30000 - 200000 Lump-sum No
Gramin Bima by SBI Life 18-50 years 5 years Rs 10000 – 50000 NA NA
iSecure More by Bajaj Allianz 18-60 years 10,15,20,25 years Rs. 250000 Income Yes
Smart shield by SBI Life 18-60 years Minimum of 5 years  Min: Rs 25,00,000                Income Yes

Disclaimer: Paisawiki does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

FAQs

  • Q: What are the tax benefits that one may derive from term insurance plans?

    Ans: The term insurance policyholder is entitled to tab benefits under section 80 C and 10 (10D) of the Indian Income Tax Act 1961.
  • Q: What are the two main reasons why term insurance in inexpensive?

    Ans: There are many ways to buy a term insurances plan:
    • The operational expenses and the agents' commission or fee is eliminated from the overall cost of purchasing an online term insurance plan from a company
    • All insurance companies across the country consider that an online term insurance buyer is generally a low-risk policyholder as it is anticipated he is a well-educated person who is earning well for himself must also be smart enough to buy a health cover for himself and in case of any emergency would be able to get to a hospital and get medical benefits at any point of time. So he is considered a low-risk policyholder is achieving maximum benefits like low premium, the higher sum assured, and better claim settlement

  • Q: What are the chances of fraud in both online and offline term insurance policies?

    Ans: The chances of fraud and inconvenience are higher in an offline policy as the agent, or a specific insurance company may divulge the advantageous information without letting out the cons of a specific plan. Also, wrong information or hiding the correct details increases the risk of fraud. 

    In online policy, the policyholder has a minor risk of divulging his financial details online, which he should be careful about, and he must beware of hackers.

  • Q: How to choose the best term insurance policy?

    Ans: Since online scrutiny of various insurance companies and their umpteen plans gives the benefit of transparency, flexibility, and convenience to the individual, there are various things to be kept in mind before choosing the best term plan which can be done by comparing the following parameters of the best policies:
    • Premium Charges
    • A sum assured

    • Premium Charges
    • Policy Term

    • Claim settlement ratio
    • Incurred claim ratio

    • Reliability and credibility of the insurance company
    • Rating ranking and review

    • And the individual personal budget
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