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What is an Online Term Insurance Plan?

An online term plan is a pure protection plan that you can buy directly from the website of the life insurance company. It offers a life cover along with a range of other benefits to help you secure the financial future of your loved ones in your absence. Unlike regular life insurance plans, you do not need to engage with an agent when buying a term plan online. The majority of insurers allow a completely paperless process.

Term insurance plans are a type of life insurance plan designed to offer adequate financial safety to your dependents. These plans offer a large sum as an umbrella cover. The sum will be available to your family and dependents in the case of your death within the policy term.

Things to Consider before Buying a Term Insurance Plan Online

A term insurance plan is an affordable life insurance cum protection plan that you should buy as soon as you start earning. The younger you start, the better it is – as, premiums of a term insurance plan increases with age.

Amount of Cover to Buy

This is the first question you should try to answer before generating term life insurance quotes online. Your cover amount should help your family meet the following expenses after your untimely demise:

  • Their regular household and lifestyle expenses
  • Pay off any ongoing debts
  • Invest adequately in the children’s important financial goals like higher education and marriage.

Generally, an amount 10-15 times your annual income is sufficient for your family to maintain their standard of living and meet their financial needs. However, you can add or subtract depending on:

(+) The other financial needs you have apart from the three

(-) Existing life insurance cover

Term of the Cover

Another important factor is the policy term for the life cover. The minimum term for which your family will need an umbrella is till your retirement age. For example, if you are 30 years now, your family needs a life cover for the next 30 – 35 years.

By the time of expiry of the online term plan:

  • Your children would have started on their own financial journeys and
  • You have an adequate corpus to live your retired years independently with your spouse

Still, you can consider a term plan till the age of 99 if you wish to leave an estate for your children or grandkids.

Benefit Pay-out Modes

You are considering an online term policy so that your family can survive and remain financially independent even if something happens to you before time. Although receiving a large sum of money sounds like a good start, you can ease your dependents’ financial troubles even further.

Your family will need to look after two types of financial decisions:

  • Regular expenses
  • One-time expenses/investments

You can divide the benefit amount of your term insurance plan in such a way that your family receives a small sum every month as regular income and a large lump sum. With their regular income need taken care of, they can simply use the lump sum for their future and pay off their debts.

Track Record of the Life Insurance Company

A life insurer’s track record is going to have a long-term impact on your policy. Remember that term life insurance plans are long-term plans which may continue for decades before you or your family will even need them.

You have to pay attention to how the insurer engages with their existing policyholders:

  • Are there branches you can go to?
  • Which online channels are available and how frequently?
  • Can you pull the details of your online term plan online?
  • Does the insurer offer EIA (electronic insurance account) for policy management?

All of these options and channels will help you continue your term insurance plan for decades without hiccups.

Claim Settlement Ratio of the Insurer

The proof of concept for an insurance policy only shows up at the time of claim. An insurer with a robust claim settlement ratio means the insurer has a smooth claim settlement process. This means, your family is more likely to have an easier time with the insurer while making a claim.

Canara HSBC Life Insurance has maintained a 95%+ claim settlement ratio for more than 5 years, with the current ratio being 98.57% for FY 2021-22.

Important Features of Online Term Plans

A term insurance plan is supposed to offer adequate financial safety for your family over a few decades. Thus, you must look at the necessary features which would keep the policy beneficial for the longest period:

  • Maximum Policy Term

    The longer the better, with the minimum limit allowing you to hold the cover for at least five years after retirement.

  • Premium Payment Term Options

    You can do away with a lifetime of regular payments and even get a discount on premiums by paying them in a shorter time, provided the policy offers the feature.

  • Regular Income Mode of Benefit Payment

    The death benefit from a term insurance plan should help your dependent look after their lifestyle and goals. The regular expenses related to lifestyle are the most difficult to manage. Thus, regular income mode of death benefit pay out helps the family more.

  • Option to Increase the Cover

    Your financial needs and responsibilities will only grow in life, at least, until you retire. Thus, your online term insurance plan should have an option to increase the cover as your needs grow.

Important Documents to Buy a Term Plan Online

You only need to submit digital copies of the relevant documents while buying online term plans. Although you can save the online form and come back to complete it later, it's best to complete it in one go and secure your term cover sooner.

Here’s a list of documents you should keep handy while buying an online term plan:

  • Photo ID Proof – Aadhaar Card, Passport
  • Address Proof – Latest Electricity Bill, rent agreement
  • Income Proof – Six-month bank statement, passbook copy, last three-month salary slips
  • Medical Reports – Any recent health reports
  • Any other documents you feel relevant for the policy

Add-on Covers Available with Online Term Plan

Always have a look at the add-on covers available with the online term plan. These added covers or riders strengthen your term cover umbrella and offer wider coverage to your family. Some of the most prominent riders to add to your online term plans are:

Critical Illness Health Cover

Provides financial assistance in a lump sum and regular income mode if you are diagnosed with a life-threatening illness like cancer, etc.

Learn more about Critical Illness Insurance.

Accidental Death & Disability Covers

Accidental riders offer additional financial assistance in the case of death by accident. These riders are available in the following forms:

  • Premium Waiver

    If you met with an accident and suffer from a permanent disability, all future premiums for your term life cover will be waived off.

  • Financial Assistance

    The insurer will pay the selected sum assured in the case of accidental permanent total disability to you. A similar additional benefit can be added to the death benefit under term insurance for death due to an accident.

Other Riders

Apart from critical illness and accidental riders, term insurance plans can have few other riders. These riders can allow you to pass on a financial benefit to specific family members, for example, children.

Why Should you Consider Buying iSelect Smart360 Term Plan?

iSelect Smart360 Term Plan is an online term plan from Canara HSBC Life Insurance. The plan offers many amazing features without compromising on the primary benefits of a term insurance plan.

  • Default Terminal Illness Cover

    Default Terminal Illness Cover

    The online term plan from Canara HSBC Life Insurance, iSelect Smart360 Term Plan, offers terminal illness as a default cover. That means you can file a claim in the plan if you are diagnosed with a life-threatening disease in its terminal stage.

  • Homemaker Spouse

    Homemaker Spouse

    You can add your employed or homemaker spouse under the same plan. This allows you to maintain a dual umbrella cover for your family, and value the support of your spouse with a life cover.

  • Child Support Rider

    Child Support Rider

    The plan offers a rider that ensures a lump sum benefit to your child. This benefit payment is dedicated to the future goals of your child. The family has to use this benefit amount as such in the case of your early demise.

  • Premium Blocking Option

    Premium Blocking Option

    Your financial needs and responsibilities will grow as your family grows. iSelect Smart360 term plan allows you to increase your term cover sum assured to maintain an adequate safety umbrella for your family. You can block your premium rate for the next five years and grow your term cover up to 100% upon your marriage and childbirth.

  • Regular Income Pay-Out Option with Lump Sum Benefit

    Regular Income Pay-Out Option with Lump Sum Benefit

    You can divide the death benefit pay out between lump sum and regular income payments. Regular income payment ensures a tax-free regular income for your family. You can also choose a growing income to provide a cover against inflation.

  • Cover Up To 99 Years of Age

    Cover Up To 99 Years of Age

    You can buy iSelect Smart360 term plan coverage for up to 99 years of age. The plan offers two options for you to continue your term life cover for up to 99 years of age. Both options allow premium payments to stop at retirement.

  • Return of Premium Option

    Return of Premium Option

    You can also opt for a return of premium option under the online term plan iSelect Smart360 Term Plan. The return of premium option will ensure that you receive all the paid premiums for the policy if you survive the policy term.

  • Steady Income Post Retirement

    Steady Income Post Retirement

    iSelect Smart360 term plan also offers a feature where you can receive a regular monthly income as a survival benefit. The policy will start paying the benefit once you attain 60 years of age. Thus, supporting your financial safety after retirement.

  • Special Exit Value

    Special Exit Value

    Special Exit Value is a unique feature available under the iSelect Smart 360 term plan’s Life Secure Option. This feature is available if your policy term is 40 years or more but your age at maturity of the policy is less than 85 years.

    This option allows you to receive almost all the paid premiums for the cover if you decide to surrender the cover before maturity.

How to Choose the Right Term Insurance Plan Online?

Even though online term plans have the simple purpose of offering long-term financial safety, you still need to select a suitable plan. Important features and benefits of the plan must align with your family’s financial planning.

Life Stage & Family

Your life stage and family members whether dependent on you or not, have a huge impact on your term insurance policy.

  • The best time to buy a term plan is when you start earning.
  • After you start a family, a term insurance cover becomes even more important.
  • You should have term insurance even if you are a bachelor to save your parents from financial burdens in case of a mishap.
  • You should increase your term life cover on achieving important milestones such as marriage, childbirth and while taking a long-term loan.

Lifestyle & Regular Financial Needs

Your term life cover has to be sufficient to support the regular expenses of your family if you go away too soon. The regular expense need will define the share of your term life cover which will be converted to a regular income for the family.

For example, iSelect Smart360 term plan lets you divide the total sum assured for lump sum and regular income payments. You can select ratios for lump sum and regular income payments from 25% / 75%, 50% /50 % or 75% / 25%.

Income & Growth Opportunity

Your income is another factor you should consider, and not just the current income. While buying an online term plan, you should keep in mind your financial situation a few years ahead:

  • If you are employed, depending on the stage of your career, you can expect your income to grow at a certain pace. Thus, buy a slightly higher life cover.
  • If you are self-employed, you may want to buy the cover with a single premium option to keep the cover safe from business cycles.

Long-Term Liabilities

Your long-term liabilities like a home loan, car loan with more than three-year tenure, etc. can add to the financial burden of your dependents after you. However, you can add these liabilities directly to your term cover to safeguard your family from them.

Steps to Buy an Online Term Insurance Plan

Buying an online term plan involves completing your application process for the plan proposal online. Here is the step-by-step process of how you can buy an online term insurance plan:

  • 1

    Provide Personal Details

    1. The first step is to provide basic information about your contact details, state of residence, education, income and age. Also, make sure to choose the correct option for the smoker/non-smoker section. This will affect your standard premium rates.
  • 2

    Select Base Policy Features

    1. Now you can select the basic benefits and define your term life cover. Change the default sum assured number and policy term as per your age and income needs.
    2. If you are buying term insurance for the first time, the sum assured should be at least 10 times and at max 20 times your current annual income.
    3. This step will give you the base premium for your cover.
  • 3

    Add Riders

    1. Select the riders you want to add to the base online term policy and select the benefit amount for each rider. Understand that based on policy tenure and sum assured of base term plan some riders may not be available to you.
    2. If you need you can go back and modify the base term cover. This step will get you to your standard online term plan premium.
  • 4

    Decide Premium Payment Frequency

    1. Selecting the correct premium payment frequency is important as you wouldn’t want to miss the premiums for such an important investment. The monthly mode is the best for salaried while self-employed can choose quarterly or annual premium payments.
    2. You can also select the premium payment term here. However, the benefits may change for a limited pay policy. At this stage, you have the standard policy premium for your age.
  • 5

    Fill Out the Application Form

    1. Once you are satisfied with the policy features and premium, you can proceed with the application form. Provide all the important details with integrity and avoid hiding anything the application form asks for.
    2. Providing wrong information on your application may lead to the rejection of the application or cancellation of policy later.
  • 6

    Upload All Relevant Documents

    1. Once you have filled out the form you can upload digital copies of all the relevant documents. Some of these documents may be needed to support the information you provided in the application.
  • 7

    Pay the Standard Premium

    1. Once the application form is complete do have a look at the preview before submitting it. Now you can submit the application and pay the standard policy premium as calculated earlier.
  • 8

    Go Through Medical Check-up & Provide Additional Document

    1. Based on your medical history, age and lifestyle choices the insurer may ask you to go through a medical check-up at a clinic near you. It is usually a one to two-hour process and solidifies your policy claim in the future.
  • 9

    Pay the Modified Premium

    1. In case your medical history, occupation or present medical report finds your life at a higher risk, the insurer may increase the premium. In such a case, the insurer will ask you for the balance of the premium and your agreement before issuing the policy at a modified premium.
    2. Such increments are nominal compared to the benefit of the online term plan, and you should not leave the purchase at this stage.
  • 10

    Policy Issued Check Policy Documents for Errors

    1. Once the insurer accepts your premium and application for the online term life cover, a policy document or contract will be issued to you. Once you receive the document, do check all your details and notify the insurer in case of any errors.
    2. Also, check the nomination section for nominee details. You should also look through the policy terms and conditions within 15 days of receiving the policy document.
    3. In case of discrepancies, you can also return the policy within this period.

Is it Safe to Buy an Online Term Insurance Plan?

It is absolutely safe to buy an online term plan. The insurance company websites follow the highest online security protocols for allowing safe online transactions.

  • Insurers do not save your card or financial information.
  • The payments are handled by secured and authorized payment gateways
  • Your banking instructions like ECS and auto-debit mandates are handled directly by the banks
  • Your personal information is stored safely with data centres following the required safety standards
  • You can always verify your application number and policy details online with the insurer

How will your Age Impact the Premiums of an Online Term Insurance Plan?

Online term insurance plan premiums depend on the mortality rates for the age. Usually, the mortality rate increases with age, especially after 60. Additionally, the risk of illnesses and injury also increases with age. Thus, premiums of a term life insurance may increase anywhere from 4% to 12% every year increase in age.

Thus, with higher age, your premiums may increase considerably for the same sum assured amount. However, you can lock your annual term insurance premium at a lower rate if you buy the cover during your younger years. This is why buying a term plan at a younger age is financially more beneficial.

FAQs on Online Term Insurance Plans

Yes, the premium you pay for the online term plan is eligible for deduction from your gross total income of the year under section 80C. The maximum deductible premium amount will be limited to the section 80C limit as defined by the annual Union Budget.

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You will need to submit the following documents while buying a term plan online:

  • Proof of Identity: Passport, Aadhaar Card, Driving License, etc.
  • Proof of Age: Birth certificate, high school mark sheet, etc.
  • Proof of Address: Latest electricity bill, bank passbook copy, etc.
  • Proof of Income: Bank statement, passbook, latest salary slips
  • Medical Documents: Any recent medical reports, or historical reports for a major illness or accidental treatments
  • Official Photographs: A passport size photograph.
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Smoking and drinking are lifestyle habits that may increase your risk of getting a life-threatening health issue. Thus, smoking has a direct impact on your base premium cost of the policy. Drinking habits may affect the premium only if you are a regular consumer of alcohol.

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Yes, you can buy any amount of term insurance plan online, provided you are eligible for it. Your maximum eligibility for a term life cover depends on your annual income. The maximum term insurance cover for you can go up to 25 times your annual income.

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An online term insurance plan will cover all deaths, except for the suicide death within 12 months of the policy inception. If you have added riders like accidental death or disability in the policy, these riders may not work in certain other cases as well.

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The online term insurance calculator is a free online tool, which lets you assess your online term plan premium for various features and policy terms. You can modify different benefits and premium payment terms to arrive at the most suitable premium vs benefit combination for your family before filling out the application.

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Critical illness rider is an add-on cover available with your online term plan. With this rider you can:

  • Waive off your remaining premiums for the online term plan upon diagnosis of a life-threatening illness like cancer
  • Receive lump sum financial support in your fight against the covered diseases

This rider ensures that you have adequate financial support to fight dreaded diseases and manage your household while you are at it.

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