Looking beyond the price could help you pick the right cover.
With sales of term insurance having soared past unit-linked insurance plans, insurers are using the online platform to boost sales and this has sparked a price war.
Each company is trying to offer a better deal and navigating through these schemes could be tasking. Online term premiums are cheaper as companies don't require to spend on distribution and infrastructure. This is passed on to the customer.
| WHO OFFERS WHAT | |||
| Plans | Premium (Rs)* | ||
| 30 years | 40 years | 50 years | |
| Aegon Religare Life- iTerm Plan | - | 10,975 | 18,972 |
| Future Generali - Smart Life | 9,980 | 14,832 | 23,379 |
| Aviva Life i-Life | 4,550 | 8,103 | 17,021 |
| ICICI Pru Life Insurance - iProtect | 6,783 | 10,644 | 20,185 |
| Kotak Life-e-Term/e-Preferred Term Plan | 6,783 | 10,561 | 17,896 |
| Met Life India-Protect | 6,949 | 10,975 | 18,696 |
| *Sum Assured = Rs 50 lakh Source: ApnaPaisa Research Bureau | |||
Despite that, comparing premiums does helps. If a 40-year-old is looking to buy an online plan (sum assured Rs 50 lakh), he would pay between Rs 10,500 and Rs 11,000 for plans from Aegon Religare, ICICI Prudential, Kotak Life and MetLife. Aviva i-Life costs Rs 8,103, while Future Generali-Smart Life costs Rs 14,832. "The cover you've selected may not be available in your city. Online plans are for those looking for a plain vanilla (basic) cover," says Anil Sahgal, founder of i-save.com, a comparison portal.
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SOME OTHER FACTORS
Ease of policy issuance: Check how the policy would be issued. According to Ajay Bansal, CEO of Robinhood Insurance, there could be a lag between buying the term plans online and the policyholder receiving the documents. Ideally, it should take a week to 10 days for the documents to be dispatched but many times it takes much longer. Also, those who have bought a higher sum assured need to be told how and when they need to go for medical tests.
Typically, life insurers do not ask for medical tests for a sum assured of Rs 25-30 lakh till age 45. If one were to take a medical test for a higher sum assured, the premium may increase by five to 10 per cent.
Riders and sub-limits: Riders on the base plan increase the total premium outgo and are not covered in the premiums of online plans. "When riders like critical illness, personal accident and so on are covered, they may come with caveats and sub-limits, like being honoured only after one year of buying the policy," says Niraj Jain, CEO of Insurancemall.in, another comparison portal.
Experts say riders should be avoided, not because of the added costs, which may still be lower than a pure cover (for, say, critical illness), but because the coverage is lesser in comparison to the plan. Say, a critical illness rider covers only five diseases when the critical illness plan would cover 20.
Claim settlement: Checking companies' claim ratio with the insurance regulator's annual claim settlement report or with online comparison platforms is advisable. This helps you know how many claims the insurer honoured in a year. Brokers say policyholders get a shock when their claims are rejected.
Taking medical tests also lowers chances of your claim getting rejected, says Gaurav Rajput, director, marketing and products, Aviva Life Insurance. If not, fill the medical history form accurately. The industry has an average claim settlement ratio of over 80 per cent but this could differ for individual firms.
Policy tenure and coverage: Check if the tenure of the cover suits your age because not all insurers offer a similar policy term. For instance, for a 25-year-old, a product with a 25-year tenure makes less sense than one with a 35-year tenure, even if the latter is pricier.
Policyholders often do not know the right amount of cover they should go for, and the sum assured is not in sync with their needs, complain insurers. Taking a cover 10 times your annual salary is the trick. Also, buying a cover earlier in life or when liabilities increase, as when buying a house, is advisable.