With increasing policyholder’s interest in buying term
insurance plans, insurance companies have started offering allied features with
it. Term insurance plans have no longer remained just plain vanilla plans.
Pure protection plans pay nominees the pre-fixed amount in
case of policyholder’s death. Of those online buyers, a majority prefer to
choose term insurance as they are easy to understand and buy.
Increasing number of people is opting for online term
insurance plans to benefit from lower premiums. Online term insurance plans are
approximately 30% cost effective compared to offline plans. But price is not
the only criterion any more to opt for online term insurance plans. Customers
understand the importance of benefits, ease of buying and claims experience of
company.
Additional features too drive their decisions. Given changes
in life expectancy, people are looking for longer coverage and want to enhance
cover through riders.
Customers are doing much more research before buying a Online term insurance plan, aided by internet. The decision making
for customers has also become much faster. Here are some popular additional
features that people opt for with term insurance plans:-
Increasing sum
assured: When it comes to longer-term investments, inflation is an
important factor to consider. To protect the sum assured from proving
insufficient years later due to inflation, option that increase the sum assured
over a period are being preferred. Few companies offer this as rider currently.
But similar plans which increase sum assured at various life events are
available. Options to increase cover in term insurance are meant for those who
want to increase the protection cover at different life stages like marriage,
child birth, etc.
Return of premium:
This option is for those people who expect something in return from their every
investment. For those survive beyond the term insurance policy tenure, term
insurance would seem to be a wasteful expenditure. To fix this, an option of
return on premium was initiated by some insurers. Such feature helps the
policyholder get the premium back at the end of the tenure. Even though they
are costly, the return on premium riders are being opted by individuals.
Staggered maturity
payment: When it comes to maturity amount or death benefit, the payment of
staggered payments over five-ten years instead of lumpsum benefits is being
opted for. Policyholders are opting for a mix of income (staggered maturity
payment) and lumpsum.
Policy tenure:
Term insurance plans are available for a period of as low as 5-10 years. But
people are often opting for the higher end. Typically, one should seek
protection based on the retirement age. However, one can lock-in at lower
premium if they buy insurance at younger age; the tendency has been to opt for
longest possible tenure.
Salary replacement:
There are covers available to protect one from loss of salary due to
disability, accident, etc. This option takes away the uncertainty from the
minds of the beneficiaries. Increasing benefit option (5% rise in insured
amount every year) under a salary replacement plan also addresses inflation and
rising cost of living.
