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Is it Safe to Buy a Term Plan Online?

dateKnowledge Centre Team dateMay 25, 2021 views322 Views
Buy a term plan online | iSelect Star Term Plan

Term policy is one of the most fundamental financial needs in your life. A term life insurance offers your family a chance to live their life as you would have given them. The nominal amount of premium you pay for the cover also reduces your annual taxable income.

You can secure some of the best term insurance policies online. Whereas other channels have their advantages, the online mode has really picked up speed. The reasons may include the ongoing COVID situation.

However, that’s only icing on the cake, the online sector has been growing long before that, primarily because:

  • Convenience
  • Transparency
  • Safety
  • Safety
Mistakes to Avoid While Buying a Term Insurance Plan Online
  • Negligible research
  • Inaccurate information
  • Lack of Add-on Covers (riders)
  • Inadequate cover amount or policy tenure

Convenience of Buying Term Plan Online

Of course, visiting banks and insurer’s branches are no fun activity. Given the busy lifestyle and work schedules, you would like to avoid taking out time to meet insurance advisors at home or office. With the advent of hassle-free online payments using credit/debit cards, UPI, etc, paying for a policy is quick and simple.

COVID-19 has only helped this trend further because this is the safest and contactless buying method. The pandemic has also altered consumer needs and buyer behaviour as there is a clear shift in attitude towards life and health insurance policies.

Transparency of Online Processes

Life insurers and anyone selling life insurance plans must abide by the rules and regulations set by IRDAI (Insurance Regulatory & Development Authority of India). One of the basic rules of selling insurance is providing clear and accurate information about the product.

As a result, you can find everything you will need to know about an insurance plan online through IRDAI or the life insurer’s website. Starting from product brochures with detailed examples of the plan features and benefits, to the legal policy document, everything is accessible.

Safety of Online Life Insurance Channel

Websites of insurance companies and insurance aggregators are encrypted and secure for online transactions, data protection, and payments. There is no paperwork when you buy a policy online. All you need is a computer, a stable power supply (with a UPS/Inverter if you experience frequent power outages), and a strong internet connection.

You will also require your Internet Banking credentials or debit/credit cards or UPI depending on the mode of payment you choose. However, despite all this, it is natural to be anxious while paying money online. You can simply follow a few simple safety steps to keep your online transactions safe.

Read more about online safety - 10 Steps to Ensure Your Online Financial Data Remains Safe

4 Mistakes to Avoid While Buying Online

1. Scant or No Research

Research is important to understand the following two important things before your purchase:

1. Which type of plan suits your need?

2. Is this the best you can get for the next few decades?

Understand that a term life insurance plan is not a short-term investment. Under ideal conditions, you will continue the plan until your retirement or even a few years afterwards. Thus, thorough research is important, so that you can confidently stay with your plan. Otherwise, it’s easy to get distracted by the new life insurance plans.

If you are comparing similar plans across different insurers, you must also compare the following:

  • Claim Settlement Ratio: This shows how good the claim process is with the life insurer
  • Persistency Ratio: This shows how happy insurer’s existing customers are
  • Claim Settlement Time: The faster the claim settlement with the insurer, the more convenient it will be for your family

Go for the one that provides the highest % claim settlement within minimum Turnaround Time (TAT). For example, Canara HSBC Oriental Bank of Commerce Life Insurance offers a one-day claim settlement promise to the eligible life insurance policies.

2. Information Inaccuracy

Referring to unknown, third-party sites that are not regulated by any authority can be risky. The authors of such sites may not be subject matter experts. Moreover, there could be inconsistencies across different sites adding to your confusion.

So, make sure you are transacting on a genuine site of a credible company. Avoid clicking on links received on mail to make a purchase. Go to the website of the company by typing the address in the address bar. To verify the authenticity of any insurance company, you can always cross-check on the IRDAI site.

  • Refer to reliable online sources, life insurance company websites are the most credible
  • Verify the information with customer care via email or call
  • Search separately for the plan name to see if the information is consistent with your understanding

Once you are on the correct site, compare various plans and select the one that best meets your needs and goals. Referring to articles on non-credible sites to decide is not advisable.

While signing up for a policy, all information must be correct to avoid any issue at the time of claim settlement. Withholding (even unintentionally) information may look like suppression of facts. Mentioning health conditions, pre-existing illnesses (if any), and social habits, transparently will help the family to claim insurance, should the need arise.

3. Not Choosing Right Rider Options

Riders are like accessories that make your term plans more effective and robust to provide a superior level of protection. For example, disability riders can give you the following benefits in case of permanent disability:

  • Financial support while you try to get back on your feet
  • Continue your life cover without having to pay premiums

You can also add a critical health rider, which will pay you a lump sum of money in case of diagnosis of a life-threatening disease like cancer, heart failure, etc.

Therefore, selecting appropriate add-on riders while buying a term plan makes your protection more comprehensive.

Know these 5 reasons to add riders to your life insurance plan.

4. Selecting Inadequate Cover or Tenure

A common mistake that online consumers make is opting for a smaller insurance cover for various reasons. Your term insurance cover should be large enough to provide for the following three financial needs of your family:

1. Kitchen & lifestyle expenses

2. Paying off any loans or financial debt

3. Saving for the important future life goals, for example, child’s higher education, marriage, etc.

Usually, all three aspects of your life depend on your annual income, and so does your ideal term insurance cover. A term life cover of 10 to 15 times your annual income is sufficient to cover all the three costs for your family.

The same mistake is done while selecting the tenure of the policy. If you are young and opt for a small tenure, the policy may terminate when you enter your 40’s or 50’s. The purpose of an insurance policy is defeated if it ceases to exist before your retirement.

Getting a new policy at that age could be rather costly depending on the health condition. Thus, ideally, you should consider a policy tenure that extends a few years into your retirement.

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Frequently Asked Questions (FAQs) for Term Insurance

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to Ask while Buying a Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
  9. 9. Does the term insurance plan have a cash value if you decide to cancel the policy?
  10. 10. Under what circumstances can a term insurance plan be cancelled?
  11. 11. Can I pay the premiums online or make electronic payments?
  12. 12. What will happen to the term plan if the life assured starts smoking after purchasing the policy?
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