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Online term plan: Simple & cost-effective way to buy insurance

While buying an online term plan, you need to read the fine print carefully. Make an analysis of what is covered and what is not covered under the policy

November 22, 2012 10:04 IST | India Infoline News Service
Ashwin—a 34-year old engineer, is employed with an oil exploration company. He is part of project team that manages oil rigs worldwide. He has to tour extensively in different parts of the world in connection with the company’s projects. Ashwin’s has a non-working spouse. The couple has two kids. Ashwin also supports his parents financially. Last year, Ashwin has bought a new house for which he took a home loan of Rs. 50 lakh from a bank. Ashwin is the sole breadwinner of his family.

As a result, he is constantly worried as to what may happen if he loses his life in an unfortunate event. He wants to buy a term insurance—at reasonable price—which is large enough to cover all his liabilities as well as future financial goals such as educating his kids, their marriages, etc. However, he is not comfortable with buying term insurance online. Ashwin then recollects a conversation in his office regarding buying a term plan online which is safe and more cost-effective since companies pass on the savings from distribution, administration and courier expenses to the customer.

Ashwin quickly switched on his laptop, logged on to check various online term plans available in the market. He compared the premium rates, sum assured and discount benefits (if any). He also made an analysis of the claim settlement ratio, to check whether the insurance company can be trusted to honour a claim.

Claim settlement ratio is the most important aspect of an insurance product. In fact, that is the chief function of a life insurance policy—offering financial protection to the dependents of the policyholder on his or her death. After making an analysis and talking to the customer care executives of different life insurers, within a few days Ashwin bought an adequate life insurance cover for him to take care of his family—in case he dies in an unfortunate event.


Subscribing to an online term plan has come a long way since the olden days. With the advent of e-commerce, more and more insurers are adopting the online purchase platform.

Buying an online term plan offers many benefits:

Easy to purchase: One can purchase a term plan 24x7, 365 days a year. This could be from your office or home. In addition, you can seek help of customer care representatives of insurers through online chat / 24x7 toll-free calling facility to resolve your doubts.

Cost-effective: Purchasing a life insurance policy online could also be more cost-effective since companies pass on the savings from distribution, administration and courier expenses to the customer.

Comparison of multiple options: You can compare various policies, evaluate riders to be included in the policy and choose one that best suits your needs.

Instant insurance: Buying insurance online is an activity that requires only a few clicks. In most cases, the insurance policy document is generated instantaneously.

Ease of payment:
One can choose from a wide range of options to pay online. These include credit/debit card payment, net banking, funds transfer.

Points to remember

Read the fine print: While buying an online term plan, you need to read the fine print carefully. Make an analysis of what is covered and what is not covered under the policy.

Ensure that you read the terms & conditions of the policy thoroughly. In case of any doubt, don’t hesitate to seek the help of customer care executives through online chat / 24x7 toll-free calling facility.

While the online purchase process does make the entire exercise much faster, it is important that one gets acquainted with the salient features and conditions in detail. This will help your family avoid any disappointment at a later stage, especially while making a claim.

While most insurers have put in strong security systems in place, it is important to reconfirm the same before transacting online. One should ensure that the address line of the browser page reads ‘https’ instead of the regular ‘http’, since the same indicates secured connection.

Finally, ensure that all your online policy documents are safely maintained and that your nominee & family members are aware of your investments. Apart from informing family members about where the investment documents are stored, you should also inform them whom to contact and what to submit in case of any eventually.

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