What is Term Insurance?

Term insurance can be defined as a type of insurance that is availed for a certain period of time or a fixed term (number of years). The basic differentiating feature of term insurance is that unlike other types of life insurance policies, a term insurance policy is less expensive since it does not have any cash value. The policy comes useful only if the policyholder dies within the timeframe during which the term insurance policy is in force.

Term insurance policies are offered by almost all major insurance providers and these come for various terms like 10 years, 20 years, 30 years etc. The most significant point about term insurance policies is that most of these policies have a built-in feature to get converted to permanent life insurance policies irrespective of the state of health of the term insurance policyholder.

How does Term Insurance Works?

 What is Term Insurance?

A term insurance policy can be considered one of the most traditional forms of insurance. To understand how it works, you can look at it in these three situations:

Buying the policy: To be able to buy a term insurance policy you don’t need to put aside tens of thousands of rupees every year. Many of the insurance policies can offer you a sum assured of up to Rs. 1 crore for a premium that could be as little as about Rs. 10,000 per annum (These are indicative figures. The actual premiums may differ depending on the sum assured and the insurance providers).

Keeping the policy: Just like any other insurance policy, you pay the premium towards these policies at a frequency chosen by you. These premiums can be paid every month, every quarter, every 6 months or once a year. They can also be paid as a lump sum instead of being paid at regular intervals.

Redeeming the benefits: Term insurance plans don’t typically come with any maturity benefits, except for term insurance with. Their main objective is to provide life insurance cover and that is exactly what they do. In case the policy holder passes away, the person who is named as the beneficiary of the policy will receive the sum assured.

The way it works is also one reason why you will notice that a lot of the time insurers refer to these plans as pure protection plans. There are no frills attached to the plan. You pay the premium and you get a fixed sum if case something happens to you.

How to choose the best term insurance plans?

When it comes to choosing the ideal term insurance these are the steps that you should follow.

Step 1: Calculate how much you want the sum assured to be.

Step 2: Decide if you wish to take a policy with return of premium or not.

Step 3: Choose an insurer that will offer you the sum assured you want.

Step 4: See the premium that each insurer will offer for the chosen amount.

Step 5: Check the claims settlement ratio of the insurer. This is a step that many people tend to ignore but is absolutely critical to getting the right insurance policy. This is information that tell you the percentage of the claims that the insurer has honoured vs the number of claims they received in a given year.

Step 6: Compare the information you have gathered and choose the plan that suits

Features & Benefits of Term Insurance:

The features and benefits that are offered by term insurance plans can differ from one insurer to another. They can also differ from one type of plan to another but there are some features of benefits that remain the same no matter who offers the policy. These are:

·         Regular term plans and TROPs offer very high sum assured for a very reasonable premium.

·         There is no limit on the maximum sum assured as it is something that will depend on the insurer’s willingness to underwrite really large sums.

·         The policies offer premium payment options of single pay, regular pay and limited payment.

·         The payment of premiums, in case of limited and regular pay plans, can be monthly, quarterly, semi-annual and annual. However, in the case of monthly payments, the insurers may require you to pay the premium for the first 3 months as a lump sum.

·         They come with a tenure than can be as high as 20 years or more, depending on the insurer.

·         With a return of premium policy, some insurers will offer 105% of the premiums paid as the maturity benefit.

·         A lot of these plans can be bought online too, which negates the tedious task of meeting an agent and fixing meetings.

·         All Online Term Insurance Plans In India are cover by Section 80C of the IT ACT which means that the premiums paid for them are eligible for income tax benefits.

·         The benefits received from term insurance plans can be covered under Section 10(10D) of the IT Act will also be eligible for tax benefits.

·         Some insurers also offer rebates if policyholders opt to go in for high sum assured.

·         Many of the insurance providers offer lower premium rates for those who maintain a healthy lifestyle.  

Source: https://www.bankbazaar.com/insurance/term-insurance.html  

5 Questions You Need To Ask On Term Plans

If you’ve ever sat for hours in front of a Las Vegas slot machine plunking in coin after coin and waiting for those four 7’s to ching-a-ling into view, you know what it’s like to keep paying premiums towards your term plan without ever seeing a penny in return.

Why then do people buy term insurance plans?

Term plans are the simplest among various life insurance options. It is one of the most demanded insurance products both online and offline simply because it’s cheap and consumers are convinced about its benefits.

However, there’s another side to this term insurance story. Claim rejections and premium payment dropouts are happening in many more cases than expected. This is because many insurance buyers seeking term plans are not asking themselves some rudimentary questions before buying.

We give you five such questions.

Do all term plans give lifelong cover?

It’s a myth that term plans offer lifelong coverage. Insurance policies are generally designed to offer protective coverage for a person till he pays the premium and there will be a maximum age limit as specified in every plan. Most insurance plans come with an entry age limit of 60-65 years and offer coverage till 75 years.

However, some company offering whole life policies. Most of them provide lifelong coverage as long as you pay the premium. But some, Life Long Term Plan, offer coverage till 80 years only. So, read the fine print before you ink the large print.

Do term plans include personal accident cover? 

Term insurance plans are basic life insurance plans with the lowest premiums and high coverage for the incident of death of the insured. They are designed in such a way that they provide the family with lump sum compensation in case of death of the insured. Most term plans offer the same assured cover irrespective of the cause of the death, except the exclusions (as cases of suicide), as specified in the policy. But many people think that accidental deaths have special consideration under a term plan.

If you wish to get additional cover, such as double sum insured in case of accidental death or permanent total disability, you have to choose a rider. For example, if you are choosing ICICI Pru iProtect Plan, a usual coverage of Rs.50 lakhs for a 35-year-old individual is available at a premium of Rs.7,000, whereas a double protection of accidental cover comes at Rs.9,700.

Is suicide covered under a term plan?

Death by suicide is not usually covered by most term insurance plans. However, some policies cover it after 1-2 years. It all depends upon the policy you choose and its terms and conditions. Apart from death by suicide, death due to any sort of self-inflicted injuries or by voluntary participation in dangerous hobbies are also either not covered or covered with certain conditions under a term insurance plan.

What is the investigation procedure for accidental death? 

Term life insurance plans pay the sum assured in natural, accidental as well as death due to critical illness. They also cover death occurring outside the country. But if a claim arises within the first two years of buying the policy, or if it is death occurring due to unnatural circumstances, like an accident, the company investigates extensively before settling the claim.

Each company has its own investigation procedure and a panel of medical professionals to investigate unnatural death claims. The company seeks information including copy of police FIR in case of accidents or medical report indicating the cause for death by illness, along with a written statement outlining the date, location and circumstances of the accident. The investigation is carried out on the basis on these reports.

What if death occurs due to a lifestyle disease?

In the event of death happening due to any lifestyle disease like smoking or overdose of alcohol etc, the insurance claim can be denied if the insured has concealed the information from the insurer. Smokers, people consuming alcohol, and those having lifestyle diseases like obesity, high blood pressure, etc. are generally categorized in a different risk pool and charged a higher premium as compared to others.

So these pre-existing medical conditions, if any, need to be mentioned in the application form of the insurance, and the policy will be approved after medical tests or at a higher premium. But, concealing the same at the time of buying the insurance and subsequent discovery can lead to claim rejection.

A term insurance policy offers a higher insurance cover at very low premiums, making it ideal for every individual. Depending on our financial scenario and liabilities, you can choose a term ranging from 5-30 years for a term plan.

But, know the claim terms and the claim process before you buy. You don’t want to end up spending hours at the wrong slot machine, do you?

Five Reasons To Choose Online Term Insurance India

Life is awash with things and events that bring us joys and sorrows in equal measures. No one is inoculated from the vagaries of life. To secure the financial future of your loved ones when you are not around, having a life insurance plan is critical.

Different families have different kinds of needs, and to safeguard their future in the absence of the breadwinner, insurance companies have launched numerous life insurance plans. The simplest among them is a term plan.

A term plan is designed to protect the financial health of your family when you are not around. It will pay your loved ones adequate amount of sum assured in order to meet the basic financial needs and assuage the lasting impact of the financial loss in the event of the death of the insured.

A simple term plan offers extensive life cover options for a reasonable amount of premium. It provides adequate income replacement to the loved ones. That’s why buying a term plan is largely considered an integral part of individual financial planning exercise.

With the rapid evolution of the internet, buying a Online Term Insurance India has become easy. You can simply visit the insurer’s website, generate a quote, and buy an insurance plan online. Following are the five reasons why you should opt for this medium:

1.       Low Cost

When it comes to purchasing anything, the first thing that crosses your mind is its cost. Insurance products, be it a life or general insurance policy, tend to be up to 50% cheaper online than their offline counterparts. This is because you can purchase from the insurer directly; there is no involvement of any intermediary. Thus, the channel sales cost are not passed down to you. This makes the policy cheaper.

2.       Efficient Process

In the online process, you are required to fill details before generating the quote. There is no physical form filling as such, where there are chances of errors. Moreover, the sophisticated user interface and process implemented by the insurers avoid the chances of errors. For instance, if any of the crucial details such as email, mobile, or date of birth goes wrong, then the website will highlight the respective field.

3.       Easy Comparison

In order to get the best deal on any product, it is recommended to research and compare. Same is the case with term insurance plan. With websites, you are easily able to browse through different products, compare their benefits, the exclusions, premium options, riders, and discounts. This helps in taking a better informed decision.

4.       Higher Transparency

Whether you are choosing a simple term plan or a term plan with guarantee of monthly income, insurers have the details of each and every plan on their website. You can browse through the products to know all about the plan—its key offerings, benefits, the extent of cover, eligibility criteria, procedure of application, claim filing process, and much more on the website. On the other hand, rarely will an insurance agent offer the complete brochure of products. This broaden your perspectives, thereby helping you choose the best term plan that suits your requirements.

5.       Quick Customer Support

Unlike the offline mode, the online mode is fast, efficient, and easy to use. There is a dedicated customer support team to assist you with a variety of queries. Moreover, the insurers maintain a knowledgebase of articles that help you choose the best life insurance plan. For example, things to look for while buying insurance plans, and other such helpful reference material to help you pick the right product. Such kind of support is not readily provided through the offline medium.

These are the five key benefits of buying a term plan online. So why approach an agent when you can easily buy a policy online and secure your family’s future?

Does Cheapest Online Term Insurance Policy Available For All

People are becoming financially literate and now understand the need of having a term insurance plan. Online term insurance plans have become more attractive as their prices have fallen by 40-50% due to demand from consumers and rise in competition among insurance companies.

You can either buy an online term insurance policy from insurer’s website or from online comparison sites (web aggregators).

But biggest question is that on which factors your decision should be based on, whether you should go for the cheapest term insurance plan or with the insurance company having highest claim settlement ratio.

The term insurance policies are similar despite the attempts to create features such as deferment of policy proceeds (periodic payments instead of lump sum payment) or some riders that provides for additional covers on payments of additional premiums.

In recent times, almost every large insurer has a comparable claim rejection ratio. Besides, new amendment to Insurance Act, life insurance companies cannot reject any claim after three years on any grounds. And if you are making full and complete disclosures in your proposal form, insurer can’t reject even early claim. So, low claim rejection ratio as a parameter is for choosing an insurance company is no longer very relevant.

Some insurers have dropped their premiums very low but now have very tough norm for those who will be eligible for these premiums. So, the cheapest Online Term Insurance is not necessarily available for you.

In most cases, customers would actually end up paying higher than the standard premiums so the lowest published premiums are just illusory. After medical test, customers are asked to pay higher premiums for issuing policy or their proposals are rejected.

If you refuse to pay additional premiums then you have to go through the whole proposal and medical examination again and have to disclose the fact that his proposal was rejected in the past.

Rejection of proposals will further increase as insurers have become extra careful in issuing life insurance policies because of recent amendments that disallow rejection of claims on any ground after three years of policy issuance.

This problem is more acute in the critical illness policies where outright rejections are wide spread and where it is even more of a challenge to motivate the consumer to persist with the process of getting this policy.

No data is available on the proposal rejection percentages or the percentage of proposals in which a particular insurance company has proposed an increase in premium over and above the normal premium. Hence, there is a need that Insurance Regulatory and Development Authority of India (IrdaI) should collect and disseminate this kind of data so that consumers can make an objective decision on their insurance provider.

Till then, consumers can look forward for online web aggregators as they make money on actual issuance of the policy and they will work harder for a company that is actually interested in issuing policies.

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Online Insurance- Setting New Trends In The Insurance Sector

The fast growing Indian online insurance market is characterized by numerous opportunities for the aggregator websites as well as Insurance companies to capitalize and grow their business. Almost every other day, there’s an introduction of new insurance products for online buyers by the insurance companies aiming to explore the possibility of innovative technologies which are simple to use and cost-effective. With growing awareness towards insurance, the number of people demanding better insurance products with excellent features of premium, cover and claim returns, technological advancements and cost effectiveness is rapidly increasing. The new IRDA compliances which provide comparison between the insurance products with unbiased information and are cost effective due to rising competition have become a key concern for Web Aggregators in India. The high internet penetration in India has helped in improving the online insurance penetration with plans for Health, Travel, Motor and Term insurance being in a constant high demand.

However, things were not assmooth as they are currently for the insurance sector. A few years ago, there were hardly any players in the segment and online insurance was almost unheard of. It was bewildering that for a country boasting ofover 300 million internet users and an e-commerce business volume of over US$ 16 billion, there were no companies in the online insurance segment till a few years back. Whatever was there was present across the other popular B2C segments like, gadgets, travel and tourism, music, books and fashion goods and accessories.

The growth story for online insurance has been on an upward trend. The online insurance market is already in excess of Rs. 700 crores with life insurance sales leading the way followed by motor, health and travel. The reason for this growth can be attributed to the fast growth of online players, complemented by increasing trust within the customer community buying Investment Insurance policiesonline. Savings, in terms of reduction of premiums and easy availability and access to policy related details have also acted as major growth boosters for the sector.

The online Insurance market witnesses a healthy mix of customers from lower income to higher income segments. Majority of customers are from the low-mid income segment which include mainly those earning under Rs 5 lakh per annum. People who earn between 5 to 10 lakh make up for 21% of online customers. Customers whose earnings are above 25 lakh account for 5 % of online customers.

Apart from this, the age profile of online insurance customers, not unexpectedly, is made up of persons between 26 to 35 years of age. They form 55% of the overall online buyers, followed by 36-45-years groups, which accounts for 19%. Moreover, it has been found that youngsters in the age group of 25 years and above prefer online services more as compared to senior citizens.

Of all the metro cities, Bangalore is at the top in the list of online insurance customers followed by Delhi, Mumbai, and Hyderabad. In the non-metros, Pune, Thane, Ahmedabad, Gurgaon, Ghaziabad, Lucknow and Jaipur collectively contribute to 27% of the online customers.

An online term plan is much more cost-effective as it works on the principle that the person making a decision to buy a plan is literate, have researched and made an informed choice and the personal information provided is completely accurate. Also, the final purchase cost is negligible as the product is available directly from the company website.

It has been observed that a term plan, when bought from an online insurance aggregator costs around 50-60% less than offline plans from the same companies having similar features.

However, a very important thing that should be kept in mind while purchasing a plan is that the cover and claim settlement depends on the authenticity and accuracy of the information given. Withholding information about any medical condition or other critical condition in an effort to lower the annual premium may result in complications or rejection of claims in future.

Hence, it is best to reveal things like pre-existing disease, habits, like consumption of alcohol and tobacco, etc, to ensure quick processing. An important point should be kept in mind that since the insurance plan has been developed keeping the online platform in mind, it may not be accessible for customers in all places except those residing in urban cities with good internet connections.

With the rapid proliferation of the online market, social media and various customer forums and sites, a buyer can get a lot of information and collective experience of other people and can check the company’s records including its financial information, customer satisfaction levels, etc.before taking a decision of going ahead and buying a policy.

To sum up, the online market is an enormous platform for you to get the best insurance deals even when buying a simple insurance cover. So start surfing, not just to plan your vacation but also for various insurance deals available through web aggregators.