Online Term Insurance Plans Become Cheaper

Prices of most things have gone up in recent years but not online term insurance plans, which are actually available at steep discounts compared to 2008, the year they were launched.

According to experts, factors like competitive pricing within this category and the segment involved in online purchases being perceived as less risky have resulted in the decline in premium amount.

The first lot of online term plans was launched in 2008-09 and the pace gradually picked up as consumers latched on to lower annual premiums and the convenience of buying life covers with just a few clicks. Currently, annual premiums for most of these products work out to Rs 18-25 per day. Term insurance is designed to provide cover for a limited time period and come at a lower premium than whole life plans, providing substantial cover early in life.

For a 30-year-old Delhi-based non-smoker male looking to buy a Rs 1 crore health cover(30-year term), the cheapest plan available in the market today is quoting less than one-fourth the price of what it was in 2008.

?Clearly, term insurance has gained popularity since the launch of online term plans and new product launches. Moreover, competitive pricing within this category has resulted in decline in premium amount. Meaning, you don?t have to spend as much on premium as you would have had to back in 2008,? said Yashish Dahiya, CEO and co-founder of Policybazaar.com.

"The companies have passed on the benefits of reduced offline marketing and distribution costs. Who would have thought in 2008, when online term plans were launched, that today term plans would cover people up to the age of 80 years. This segment has truly revolutionized the online insurance industry in India," he added. Almost all life insurers, be it private or state-run, now offer term insurance plans through their websites. Experts say that besides agent commission not being applicable on online term plan, the premiums are lower also because of the segment that is involved in online purchase.

?Presently, the segment which uses the internet to buy insurance policies with ease is perceived to be less risky. People in this segment belong to a young age group hence are acceptable to any life insurer.

The risk profiling is based on lot of other factors as well,? said Saroj Satapathy, CEO, Ideal Insurance Brokers Pvt. Ltd.

For example, the cheapest plan available in the market today for a 40-year-old non-smoker male looking to buy a Rs 1 crore health cover for a 20-year term is at nearly 77 per cent discount of the price quoted in 2008. The fact is prices offered have continued to go down with new product launches in this category and entry of new players.

Satapathy added that while buying online policy, one needs to be honest and declare the minutest of details including belonging to smoker/non-smoker category, life style diseases(if any) etc. It is always advisable to involve insurance advisor to understand the need for declaring details so as to avoid unnecessary delay/denial in settlement of claim.