How Safe Is It to Buy a Term Plan Online?

Written by : Knowledge Centre Team

2026-02-25

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7 minutes read

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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:

Which type of plan suits your need?
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 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:

Kitchen & lifestyle expenses
Paying off any loans or financial debt
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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Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.