Term plans have suddenly become irresistible for those who understand the importance of the purest and best form of risk protection, and who also know that they should not mix their investment and insurance. Nowadays, it has grabbed attention due to lower premiums that are amazingly low compared to other plans and offline plans as well. But, before you leap the charms of low- priced term plans, read the fine print about the many issues that are not so apparent.
There are many term insurance plans in India, but all of them have low and different premiums and features which are getting confused and baited for prospective customer to choose the best term plan for him.
Commission and Administration Cost?
You must have heard  about most of the agents and even media personalities who tell you that online term plan is lower because the agent commission is saved and other administrative costs are not present in online term plans, but that’s not the biggest reason because if agents commission is just 25% of the premiums in 1st year and there after it’s in single digits for rest of the term, so if agents commission’s absence was the reason for lower premiums than it should be just 10-15% lower than offline term plans.


The real reason why online term insurance plan premiums are so cheap is that because of the segment which buys online is perceived to be less risky! It’s about the target market category. A person who is net-savvy is perceived to be less risky than a person who is not net-savvy and then it’s assumed that he will have access to better health care a better lifestyle and more chances of outliving his non-net-savvy counterpart. So a govt. employee from Patiala buying a term plan directly is seen differently than an IT professional from Chandigarh taking an online term plan.
Online Term Insurance vs. Offline Term Insurance
Though, the online premium is low , it does not appear on the top wish list of customers and what everyone needs is very high claim settlement ratio and excellent customer service. There have been cases where customers bought the online term plan and after that, they had horrifying experiences starting from increase of premium once they bought it, No-response from the company for long duration and Long & frustrating delays in medical tests. This is what pisses off customers most and they get a feel that If situation is bad at the time of buying the policy, then what will be the response when their families for claim settlement.
So if you are a kind of buyer who understand Insurance very well and how things work in this area and you also have trust in online term plans then you can go for online plans. But if you are not comfortable with it, then you should try the old way of buying insurance through an agent. Some companies are charging online premium 3.5% extra, if you buy online plan through agent.
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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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