Blame it on technology. Many insurance agents are ducking for cover as term insurance plans go online in India resulting in cheaper premiums for the customer.
Life insurers have become more innovative as the years have gone by and launched best and cheapest term life insurance policies keeping the customer’s wallet in mind. The great Indian sale of online term insurance in India has come of age.
Let’s take a quick look at what’s on discount.
Why has term insurance become so cheap ?
Today, more and more Indians are living longer. Better health care facilities and advanced medical technologies have increased the life expectancy of 55 years in the 1980s to nearly 65 years today. This has prompted life insurers to re look at the mortality rates which drive the premiums that customers pay.
Life insurers are also aware of the fact that the Internet population of India is growing at a rapid pace. Though it stands at a pathetic 6% – 7% as of today, life insurers know that more and more Indians using Internet is only going to be good for their business.
Another reason cited for the reduction in premium is cut throat competition in the life insurance industry. There are around 20 life insurance companies in India and getting a foot hold in the customer’s portfolio is on everyone’s mind.
Naturally, since the customer is king, the premiums have to be reduced if anyone wants to attract customers.
Advantages of term insurance on the Net
Life insurance companies are now offering investors term insurance directly from their websites. Customers can go to the websites, key in some data, pay for the premium online and get hold of their choice of the best and cheapest term insurance plans.
Most of the online term insurance are around 30% – 40% cheaper than their offline counterparts. This works as the customer buys the policy directly from the insurance company. The middleman/agent/insurance adviser does not come into the picture. Since the cost of servicing and paperwork is reduced, the insurance company passes on the monetary benefit to the customer resulting in cheaper premiums.
Also, most of the investors who buy term insurance on the Net are young kids-on-the-block who have good health and might not need to do a medical checkup, which is mandatory for term insurance beyond a certain age group and sum assured. With more online customers falling in the low risk zone, the insurance company can offer premiums at huge discounts.
The best and cheapest term insurance policies are online
Aegon Religare was the first life insurance company to launch the online version of its term plan called iTerm. It has sold nearly 11,000 term policies since 2009 when it was introduced. The other insurers obviously have got a wind of this and launched their own versions. Kotak Life Insurance has come up with Kotak e-Term/e-Preferred Term while ICICI Prudential has introduced ICICI Pru iProtect Option 1. The best and cheapest term insurance plans have arrived online and how !
Here is a look at the premiums across different age groups that these three life insurance companies are offering for the respective online term insurance.
Term of policy is 25 years, Sum Assured is 25 lakhs
If you compare this with the offline version, it comes out to be around 30% cheaper. Since the premium that you pay for term insurance is lost by you, you should go with the cheapest premium term insurance. That is why the online version is the best.
Here are some of the features of these three insurance policies.
| Features | Kotak e-Term/e-Preferred Term | ICICI Pru iProtect Option 1 | Aegon Religare iTerm |
| Entry Age (as on last birthday) | Min. 18 years, Max. 65 years | 20 / 65 | Minimum – 18 years Maximum – 60 years |
| Policy Term | Min. 5 years, Max. 30 years | 10 / 15 / 20 / 25 / 30 years | Minimum – 5 years; Maximum – 25 years |
| Maturity Age | Max. 70 years | 75 years | Maximum – 65 years |
| Sum Assured | Kotak e-Term: Min. Rs.3,00,000, Max. 24,99,999Kotak e-Preferred Term: Min. Rs.25,00,000, Max. Subject to underwriting | Maximum – No limit (subject to underwriting requirements) | Minimum – Rs. 10,00,000 (in Multiple of Rs. 1,000) Maximum – No limit (subject to underwriting requirements) |
If you note, one major difference between the offline and online versions is that insurers are encouraging cover up to 75 years of age which was not available earlier.
Also, the recommended cover by the insurers themselves is very high. In fact, ICICI Prudential’s iProtect shows how much percentage of investors choose the Sum Assured that you have chosen to help you make a quick decision on the cover.
Things to watch out for when buying online
It’s natural to ask whether you should switch over if the online version is so cheap. Well, yes, you should make an attempt at it. But be sure to first take the online version before you discontinue your current and more expensive term plan. You do not want to be in a position where you first discontinue and realize that you cannot get the insurance due to some glitch.
Also note that do not expect the premiums to be very cheap as you would have taken the current policy some years back and with your current age, the online version might only turn out to be a tad cheaper than the offline premium that you are paying. In that sense, you could possibly be disappointed. You should not compare a policy you want to take today with one that you have already taken some years back.
Note that you will be required to submit your documents when buying a term plan online. In spite of this, you can still be asked to do a medical health check. Most of the insurers want to be sure about their underwriting decisions and could possible ask you to do a health check. If more premium has to be paid, you will need to do so over and above what you paid when you applied for the plan online.
Buying the best and cheapest term insurance policy never got so easy for your overall financial planning. Go for it.
Good artcile. I have taken Kotak as I think that is the cheapest even if you don’t go online with it.
I have haerd stories of bad practices in the online mode though. Not sure if they are correct.
@Rajeev, Bad practices could happen anywhere ! Kotak is the cheapest, yes.
Kotak is good but their claims pending is more which means one’s dependents has to wait for long to get their claims settled.
@Abhi, True Abhi but did you find out the reason why that is the case ?
@Abhi, Which one is good in your eyes Abhi and why? I’d be helpful for the readers.
@Vivek K,
I have done extensive research and found that the following are good based on Claim’s settled/reputed/pending and of course the cost:
My details:
————
Cover:1 Crore
Age: 31 years
Term: 30 years
Others: Non-Smoker, Non-Drinker
1. HDFC Life’s Click 2 Protect (Cost:11,910 )
2. Kotak Mahindra’s E-Preferred Term (12,684)
3. ICICI Pru’s iCare(15,221)
4. Birla Sun life is also good if you need cover for less than 50 Lakhs. (Max sum assured is only 50 Lakhs)
* All inclusive of Tax.
I got these details from their respective websites today.
Please correct me if the figures are wrong.
@Abhi,
I have not considered LIC at all as the cost is too high.
I’m paying 12,000 plus for 35L cover for 35 years term. I started this when I was 28 perhaps.
Let me give more information. Try not to go beyond the 4 companies I mentioned above. Due to any other reason, if you couldn’t avail insurance from above.
Then, you can look at Bajaj Allianz, Metlife.
And then, Bharti AXA and Aviva.
And don’t even think of other companies like SBI Life etc. It’s waste of your money and remember, you are leaving your family in middle of no where..!!
@Abhi, Why do you say SBI Life is a waste of money? Any bad experience?
SBI is pretty solid and reputed organization in India.
@Vivek K,
Friends,
Thanks for your comments.
I gave the conclusion based on the following parameters:
Claims settled
Claims reputed
Claims pending
Cost
*Year of Establishment
*Profitability of the Company
*If you are taking from a company that is recently established or not profitable at all, then there is no guarantee that if it will survive till we survive.
You can also come to this conclusion, if you analyze the data from the following websites.
Sources:
http://www.investmentkit.com/articles/2012/02/life-insurance-claim-settlement-ratio-for-2010-2011/
http://www.business-standard.com/india/news/lic-scores-best-in-claims-settlement-during-2010-11/436579/
http://www.investinsure.in/lic/claim-settlement-ratio/
@Abhilash,
Good information. Though LIC’s claim settlement is higher they have very large customer base. Private players are slowly settling more claims. It would be interesting to see the data for 2011-12. I liked your quote
“If you are taking from a company that is recently established or not profitable at all, then there is no guarantee that if it will survive till we survive”
Keep contributing……
@Abhilash, Thanks Abhilash. I really like these two parameters you took: –
*Year of Establishment
*Profitability of the Company
This is hardly compared but I think one should look at these two parameters as well.
@Abhi, YEs, the cost of LIC is way tooo high.
@Radhey,
Agree that cost of LIC is very high but people still continue to have faith and buy policies year after year. I think they get a satisfaction deep inside that if anything happens to them their family will not have to suffer.
@Rakesh, Where is the faith coming from, I don’t get it.
Also, the premium is not at all justified.
@Vivek,
LIC has been there for a long time, so people might have seen their parents/grand-parents taking policies and must have got returns too. That’s why the faith and trust built over the years. I agree that the premiums are way too high. Private players are relatively new and they still have not been able to build the trust with the people. It will take time…..
@Rakesh, I don’t buy it. Just because someone is there for a long time people should trust it.
Do people trust Congress party? or Indian post office? or Air India? They have been in existence since independence.
@Abhi,
Yes LIC’s cost is too high since they pay commission to agents but their claim settlement ratio is also good. At least you can have a peace of mind that you family will not have to suffer if any claims arrive in future.
@Vivek,
Yes, you are right, we just can’t trust them since they are for so long but then private players have not proved their worth too. So have to go with someone. I too closed couple of my LIC policies since the premiums were high but retained their term plan.
@Rakesh, Fair enough. I just want people to do a proper comparison and then take an educated decision, not just go with LIC blindly or any company for that matter.
@Vivek,
Inspite of so many blogs available to educate investor, people still end up buying junk LIC/Private policies and again these are all educated people.
@Rakesh,
Those are the people who either don’t have access to net and blogs or are in a rush to save income tax in March.
@Vivek,
They all have access to net, infact some of them are in senior position too but when they come to manage their finance they lack behind.
@Abhi,
I have taken term plan from Aviva and found it ok, no hassels though. But if LIC comes up with its online term plan then i will go ahead an buy it. I also have an offline term plan from LIC for over 5 years that’s the reason i am biased towards them.
@Abhi,
Looks like you have done good research. I too approached ICICI and Kotak before buying from Aviva. Since their customer service was pathetic i did not buy from them.
@Abhi, That’s pretty awesome Abhi, thanks for sharing!
Could you also share on what basis you selected these 4 companies? Is it only the claim settlement ratio or did you consider any other factors?
Also, earlier you advised to avoid Kotak but it is number 2 in your list. Why so?
@Abhi, Good stuff Abhi.
Have you used any of the aggregators to see what they show up – instead of doing it on each insurer’s website, you can use use a comparison website.
Is that useful, do you think ?
@Abhi,
Yes that is the problem with Kotak, too much claims pending. When i asked this question to them they could not give a proper answer.
looking for term insurance for around 25 lacs
the article is good but do these private companies really give claims
@abhijit, Actually at the first instance they will want to reject. It is true that LIC pays out themost but if you did everything correctly when you took the life insurance, why will they reject ? Even if they do, then you can go to court to claim.
Going to court for claims can be tedious for your family when one is not around and might really not be the wiset thing to do, but why can’t LIC do that !!
So, if the term insurance was taken in the right manner, be confident.
I totally agree with u,don’t hide any details regarding health,income or previous policy details.If everything is in order, how cany reject claim.
Hi Radhey,
Nice article. Aviva has also come up with a low premium term plan “i-Life” which seem to be a good online term plan.
What’s your view on the same?
@CJ, Will need to review in the future.
@Radhey Sharma, Ok. Thanks. But what’s your take on buying term plans online ?
@CJ, Well, go ahead and buy them if you can possibly. Its cheaper. Read the T&C with a comb !
Online is the way to go in the future. There is no issue with it if it fits your requirement.
@Radhey Sharma, Yep I did and I feel it is great and planing to buy it soon..
Hi,
I have a term insurance policy from Met Life called Met Suraksha for a Rs.50 lakh cover for which I am paying Rs.16000 + P.A which i took 3 years ago. I have recently seen the online term insurance plans and the premiums are much lower than what I paying. Is it advisable to discontinue this policy and take the online plan. Are there any differences in the terms and conditions in both these versions.
@Gautam, First try the online plan, if you get it then discontinue the offline one. I do not think there are any diff in T&C but always better to check with the agents.
Hi
Thanks for your article …I have a question …in a similar article in Outlook Money it was mentioned that instead of going with only 1 company you should split the total sum assured between 2 different term policies of 2 different companies. That will reduce risk of the customer. What’s your take on that? I see that if you split the policy then the premiums are going up…
pls advise
Raj
@Raj, The premiums will not go up. You should use two different companies for diversification.
Try and use laddering -read here for more : https://www.thewealthwisher.com/2010/06/13/young-split-up-your-term-insurance/
Why is there a difference between online and offline term plan?
Which is the best term plan option now?
please help…
@Suneeta, The agents fee is not there so you save the money on commissions.
Best term plan, I could do an article on it !
@Radhey Sharma, Thanks for your reply. Will be waiting for your article. Thanks 🙂
@Radhey Sharma, Sir, did you get to this article? 🙂
@Vivek K, Will do Vivek.
@Radhey,
Yes an article on online term plans would be great. Over the last year or so many companies have come with competitive rates and people are in doubt from which company to buy.
@TheWealthWisher, Thanks, I might need one soon. 🙂
@Radhey,
There is good competition between private players on online term plans. LIC has also been thinking to come out with their version of online term plans. If they come out with competitive rates it would be a game changer and eat other insurance companies business. Not sure how it would effect their agents.
@Rakesh, LIC runs on their agents only. Although they are planning to launch their online term insurance by March end, I don’t think they would do anything to hurt their agents . LIC will play safe and sell term insurance on their goodwill and not highly competitive prices. That’s just my observation.
@Vivek K, I think your obsevration is right Vivek. Too huge a agent lobby !!
@Rakesh, I have heard that it is the agents lobby that is lobbying for LIC not to come out with its online term plan as that will literally kill their business. But it is not doubt that it will be a game changer. A big one at that.
@Radhey / @Vivek,
Looks like LIC takes good care of their agents otherwise they should have come up with online term plans long time back.
it is a great lesson to new coomers, people like me.
@narendra, It’s good to know that you liked it Narendra. Keep visiting and we can together share and learn a lot more. 🙂
So, which plan are you planning to take?
Why don’t you do a comparison story on online term insurance plan?
And can you please share some light on Aviva i-Life online term plan.?
Thanks!
What exactly you want to know about Aviva? If your question is if it is a good policy or not then there is no one answer to it. What is good for me may not be good for you.
You should do a comparison of term plans based on following parameters and select the one that suits you…
– Claims settled
– Claims reputed
– Claims pending
– Cost
– Year of Establishment
– Profitability of the Company
These were used by one of the readers Abhi and he has shared his results in one of the comments above.
Let us know which one you chose and why.
@Sunny,
Aviva-i-life is good too, its the cheapest one, I did opt for it a couple of months back. But as per experts HDFC online term plan is best product now available in the market.
But beware of the customer service! Lately I have been reading lot of negative feedback of online term plans especially HDFC. They don’t respond in time and customer has to run around and follow-up a lot.
Radhe, just had a question why didn’t you include Aviva i-Life in your research?
@Chirag,
As this post is more than a year and half old, Aviva might have not been popular then.
Hi, not for any specific reason to be honest.
Hello friends i am young guy 33 yrs old.one year back i had an heart stroke. Endolpasty was done . Now i am good in health.there r no health problems now i exercise daily and walk 6kms daily .plz suggests some reliable term end insurance policy plz
@Ravi,
For online you can go with Aviva or HDFC Protect. If you are comfortable offline then LIC.
But please make sure to disclose all your illness. Your premiums might be high but its worth it.