No matter how trivial buying a term plan sounds, its importance is felt only when the need arises. Term insurance provides coverage to the insured’s family from financial uncertainties of life if the breadwinner is no more and are the cheapest form of life insurance. As it runs low on commissions, the insurance agents are unwilling to sell it. If information regarding term insurance is sought by a customer, suggestions to buy some other form of life insurance are brought forth.
Online buying of term insurance can come handy in such a scenario. Buying online means you sit in the comfort of your home and compare various options provided by different insurance companies at your pace. You can even visit an insurance aggregator website and compare various term plans on one page itself. Moreover, while buying online insurance you can save a lot on your premiums as there are no agent commissions involved here. An added benefit is that your insurance company makes a note of your email and can send you reminders when your next premium is due.
Though purchasing online may sound easy, it comes with its own set of difficulties. But before we come to that, here are some basic things you should keep in mind when buying a term plan, online or offline.
Basics to keep in mind when buying term plan
The riders: In case you die in an accident, accidental death benefit can give your family an additional amount apart from the amount payable via pure life cover alone. So if you have a Rs50 lakh life cover and a Rs50 lakh accidental death benefit, in case of death by accident you will get Rs1 crore. It costs a fraction of the term cover.
In case you have an accident of any sort and face a disability from loss of limb or eye, permanent (total or partial) disability cover will ensure you are paid right away, thereby covering the risk of survival and additional assistance, which may arise due to incapacity to work.
If a critical illness is detected (there are 27 of these), you will get paid as soon as possible by a critical illness cover. Also, this is in addition to any health insurance you already have.
If you opt for waiver of premium in case of accidental benefit or critical illness, you may not have to pay for your term cover any longer and still maintain your cover.
Tenor of cover: Please take cover for the entire duration of your working life. So if you are 32 years and intend to work till 60, take a cover for 28 years.
Cover amount: In the West, about eight times your annual income is considered adequate. In India, owing to growth and inflation, we suggest a cover 10 times your annual income. Add to this any major liabilities such as a home loan.
The company: All companies have a similar claims handling process and the regulator is there to ensure fair claims are paid. In case you are worried, split the risk and take a cover from two-three companies. But do not forget to inform each of them about the other covers.
Which variant should you buy? Reducing term cover is one where the sum assured reduces with time. As you grow older, your economic value (value of remaining income till you retire) reduces, so there is logic in this; also some of the liabilities may get repaid over time. Expanding term is the opposite—here the sum assured expands. As you grow older, inflation goes up, responsibilities grow and you buy a bigger house with a bigger loan, among other things, so the financial needs of the family also grow. Level term stays the same throughout the term. This is the one that is usually recommend as it balances your reducing economic value with inflation.
Problems you may face when buying online
Payment-related difficulties: Problems such as money getting deducted from your bank account but no reference ID popping up, or money getting deducted from your account but not reaching the insurance company, or double deduction of payments can sometimes crop up. There is no reason to worry about the same as the insurance company can check the bank statement and get that money transferred to their account through the secure gateway. Hence, if you face such an issue, all you need to do is contact the insurance company.
Delay in issuance of policy: Sometimes an insurance company may require you to submit medical proof or get a medical test done at the time of policy issuance. If your money has been deducted and yet you have not received a call for your medical test, you need not panic. The process is that once the payment is made, the customer gets a call from the insurer in 7-15 days for medical tests. A medical test is fixed in a nearby hospital at a time that suits you. If you do not get a call from your insurer after seven days of making a payment, we suggest you get in touch with their company representative and brief them about the situation to expedite the procedure.
No acknowledgement from the insurer: Sometimes even after the payments are made, customers do not hear from the company. As a rule, if the premium has been paid, the customer is supposed to receive the insurance policy within 15 days from the date of issuance. If this is not done, then the customer can take legal action against the company. Get in touch with the company representative if such a situation arises.
Doubts on safety of transaction: If you have doubts about the safety of your transaction, check the url. It should start with an “https” rather than “http”. You will proceed to the payment gateway which would ask you how you want to pay (through debit/credit card or netbanking) and which bank would you prefer. If the payment is being done by the debit or credit card, then you are required to enter your CVV number. This CVV number ensures that your transaction remains the same. Also, the final step of any debit/credit card transaction asks for your secure password, which is found on the bank’s site. This is a customer generated password which cannot be seen by anyone else and without which no transaction can take place.
Buying term life cover online is not only safe, but also an easy way to secure your loved ones.
Yashish Dahiya is co-founder and CEO, PolicyBazaar.com
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