Online v/s offline term plans: Which is a better option?
A low down on the upside to buying a term plan online
Term insurance without a doubt is one policy every family needs to have thanks to the combination of low premium outgo for a decent high value cover. Post the emergence of e-commerce, financial products too are being made available online and that too with great ease. So incase if one wants to go for a term plan, they have the option of doing it the online way.
Buying a term insurance plan online is the cheapest way to buy insurance as it not only saves your time and also money.
Following are the reasons why you should go for an online plan
Online term plans are on an average are 40% cheaper than the offline options. This is primarily because there is no intermediary involved in the process. You are directly connected to the company via their website, hence there is no room for any commission to broker or agent.
In an offline plan for every premium paid, a certain percentage goes to the broker. However, when one buys an online plan, all these costs can be saved and the company passes on these benefits directly to the customer in the form to lower premiums.
|Online Term plans|
|Insurer||Product Name||Premium (Rs)||Renewel upto (age)||Riders availble|
|Reliance Life||E-Term Plan||7426||75||0|
|Edelweiss Tokio||Protection Plan||8208||80||3|
|Maxlife||Basic Life Cover||8436||70||1|
|PNB Metlife||Mera Term||8459||75||0|
|HDFC Standard Life||Click2Protect Plan||8641||75||1|
* Premium rates are for a 30-year old male,Duration: 30 years, Sum Assured: 1 crore
# Premium figures shown are inclusive of Service Tax
Online plans offer high sum assured for a lower premium given the low mortality risk and reduced servicing costs. The plans available range from Rs 5 lakhs to Rs 5 crores and beyond. Even though the same plans are available offline, applicants are generally seen settling for lower sum assured, solely due to the high premiums to be paid.
While applying for online term plans, one has to give detailed disclosure regarding oneself and ones health as online plans can be termed as a contract between the company and you on the basis of good faith. Details about present and past medical history, personal and family health information, lifestyle habits are all sought.
Any fraudulent details provided on these fronts may prove to costly at the time of claim settlement. During the course of filling the application online, incase any questions are left unanswered an alert is given right away, ensuring that all the required details are filled to ones satisfaction. Hence, there is no room for ambiguity from the applicant's point of view.
When it comes to offline mode, most of the time, the forms are filled by an agent/broker. There are times when certain details are not filled honestly and sometimes certain columns are left blank intentionally or unintentionally, which may all lead to claim rejection years later. Also, there have been cases when agents have misguided the applicant inorder to escape from what they term as cumbersome health checkups that are required.
Incase there are any doubts, while filling the form online, most of the companies have help lines where one can call and rectify their doubts. Even at the time of claim settlement, one can co-ordinate with a pre-designated call center and get the work done.
This is one point used by most of the brokers to dissuade people from buying online scheme. They promise that for the claim settlement they will do the running around which is required. Financial planners note that there no running around required for the initiation of claim settlement process. All these are just ploys used by the brokers to make the process look cumbersome.
With regards to claim settlement there are certain guidelines set by insurance regulator, Insurance Regulatory and Development Authority, (IRDA). For any claim within the first two years, insurers have a timeframe of six months to investigate and settle the claim. For policies older than two years, there is a 90-day period during which the settlement has to take place.
Hence, it doesn't matter whether you have taken the policy online or offline, the claim settlement will undergo the same scrutiny. There is no broker magic here. Also, there is no data till date that will support the often-heard broker claim the number of online policy rejected during settlement is higher than the offline ones.
In case, even after proper disclosure of all necessary information, your claim gets rejected then you have the provision to approach an insurance ombudsman for justice.
According to latest IRDA annual report, the claim settlement ratio of LIC was better than that of the private life insurers. Settlement ratio of LIC stood at 98.14% as compared to 88.31% for private insurers.
Please note: Claim settlement ratio mentioned on the insurance company website, is a combination of both online and offline plans.
Finally, the only pitfall of going online is that there will no broker calls to remind you that its time for premium renewal.