Having a life insurance cover is important to ensure your family’s financial stability in your untimely absence. Traditionally, life policies like endowment, money-back, and unit-linked insurance plans (ULIPs) are available.
However, the premium on these policies is higher, which is why not many people opt for life coverage. Insurers also offer a more affordable type of life insurance policy, known as term insurance.
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About term insurance
You may ask what is a term plan. Well, it is a form of life insurance policy, which pays the benefits to your nominees in your absence during the policy tenure. Most term plans offer no survival or maturity benefits, which makes it a reasonable way to procure higher coverage. Due to their lower premium, term plans have become popular.
Insurance companies provide online and offline term insurance plans in India, and you may be confused about which is a better option. Here is a comparison to help understand these two alternatives, allowing you to make an informed decision.
Premium
Generally, the premium for an online term life insurance plan is cheaper when compared to an offline policy. This is because when you buy an online plan the need for an agent is eliminated, which saves commission for the insurance company. Additionally, insurers reduce their administrative costs and overheads when you choose to invest in an online term plan. The insurer passes on these savings to you, which lowers the payable premium. This helps you get a higher sum assured (SA) if you purchase an online term policy. While reducing the premium is beneficial, you must not let it be the only driving factor.
Claim settlement
The Insurance Regulatory and Development Authority of India (IRDAI) has set the guidelines for claim settlement. Any claim received within two years from the date of purchase must be settled within six months. For claims received after two years, the insurers must settle them within 90 days. Irrespective of whether you buy the policy online or offline, the guidelines are the same. An online term life insurance is more convenient to purchase, as you can complete the entire procedure from the comfort of your home or office at a time suitable to you.
Customer support
Some insurance agents may try to dissuade you from investing in an online plan stating the cumbersome nature of buying and the claim settlement procedure. However, the entire process is simple and quick, and concludes in a short period. If you still get stuck, you can take help from the virtual customer assistance or call the helpline number of the insurance company to get your doubts cleared. Your nominees can also easily coordinate with the insurance company’s call center to file a claim in case of need.
Information disclosure
When you buy term insurance plans in India, it is important that you provide all the relevant details related to your job, income, health condition, lifestyle, and family history. This ensures your nominees do not have to face a claim rejection in the future due to non-disclosure. When you are filling the online application form, you will receive an alert for any information you may have missed. In comparison, your agent may fill the form if you buy an offline policy. The agent may intentionally or unintentionally miss some information or provide inaccurate details, which can be the basis for claim rejection in the future. Some agents may avoid furnishing important information to help you escape from the health checkup at the time of policy purchase. This may also result in your nominees’ claim being denied in the future.
Whether you buy an online or an offline term plan, it is important to read the policy document carefully. Understand all the terms and conditions to make sure that the chosen policy suits your family’s requirements.