“Paid to die”, I remember this short drama from my childhood. The story is plotted in such a way that it is an eye opener for everyone. We usually pay fewer attentions to many significant and definite life events and keep ourselves busy with day to day activities. As a result we tend to ignore various important and larger aspect of our life. Let’s try to understand some of these events that I still remember from the short drama I went through at my age of 12.

Nishant and Nandini both were working parents of two school aged children. The story goes on to plotting a sudden death of Nishant due to heart attack. And thereafter, struggle of survival starts for Nandini and her kid. I came across the term Insurance, while studying about the financial hardships Nandini had endured. Yes, if one may say it’s a payment for death still it’s a diamond or miraculous product I understand it fully and to its depth.

Image Source : policyx.com

Yes, many may say insurance is wastage of money in terms of paying premium, but let’s conclude with confidence that there is no substitute available for term plan. While, profit or other plan may be debatable but Term insurance has always remained at top and has been undebatable and a must need for all, based on individual’s’ goals.

Here, I am not suggesting or advocating going and purchasing an Insurance, that may be foolish and an individual would end up paying huge premium which probably is not needed.

The very 1st Question that we need to ask ourselves before we go for an insurance plan is, do I really need Insurance? If yes, up to what extent? And from where I can get the same? Therefore, we will now be discussing about the current trend on online practices, and the 3rd question probably we will be discussing more under this article, but before that let’s understand how and up to what extend we can opt or go for insurance.

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Term insurance is usually goal based protection cover product. Let’s take this example

You are earning good. Hence, you are saving as well as investing to increase your surplus money to meet the financial needs for higher education of your kid, which may be 20 years down the line, amounting upto 20 lakhs

Now your investment is giving good returns, then what is the need to spend money in terms of premium with an investment linked insurance product where insurance companies retain a portion of your profit?

You keep on doing your usual investment and saving with higher returns and keep earning. However, just to be on the safer side, if something unfortunate happens to you during the course of 20 years to protect the education cost of your child. You might want to think about the need of a term plan of 20 lakhs and only for a period of 20 year. The premium will be very less compared to other plan and at the end when you calculate everything; the net will be profit for you.

Life is full of ifs and buts. None of us knows what might happen even the next minute. Term insurance plan is necessity for an individual who has dependents or the family. It’s always a proven fact that a term plan offers the most ‘value for money’ proposition
Term insurance is the simplest and most basic insurance product. Term insurance plans are designed to ensure that in the event of the policyholder’s death, the family gets the SA (the cover amount). Term plan provides risk coverage for a certain period of time (term/duration). If the insured dies between the time period specified in the policy and the policy is active  / in force  then a death benefit will be paid. It is the inexpensive form of Life insurance in terms of premium.

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Why Online Insurance Plans?

  • Cheaper than traditional plans like money back life insurance or endowment plans (or) offline term plans. Online term plans are around 30-40% cheaper than the offline plans.
  • The entire application submission process done online through the company’s online website. So, it is hassle free.
  • You may not be influenced by an agent or advisor while buying online
Key Features (You must look at):
  • Company Reputation While the company and its reputation is important in any business, it is predominantly so in life insurance. It is the individual’s duty to ascertain whether that is the in practice. Among other factors, he must weigh up the experience of the life insurance company and its partners and track record in delivering results, their standing in the domestic market, the credit rating on deposits – for example a company with a AAA credit rating broadly indicates resonance financial health
  • Solvency Ratio The stability and financial standing of the insurance company is firm by the solvency ratio. It gives an insight about whether it can make good all awaiting claims and grow the business without going bust. 
  • Claim – settlement ratio One way to decide the insurance company will make good on the policyholder’s claim is to evaluate the claim & settlement ratio. The ratio tells the individual how many payments have been done per 100 claims. So a 100% claim-settlement ratio is very rare, means the company has settle each claim. Go for companies with superior ratios implying that most claims have been settled
  • Expenses We know that expenses play a significant role in term insurance plans. Look for term plans with the low expenses as this translates into lower premiums for the similar cover. Also prefer insurance companies those offer discount on premium rates – to non-smokers, for instance.
  • Riders A life insurance rider is an add-on to the primary policy, which offers benefits over and above the policy subject to certain circumstances. The policyholder can attach riders to the term plan. So if let’s say there is a critical illness rider, he is entitled to receive the SA on being diagnosed with the critical illness. This is in adding up to the death benefit of an amount equal to SA on death over the term of the policy. Likewise there are other riders like disability rider, loss of employment cover, waiver of premium cover, among others. The policyholder should select riders based on individual and family requirements since they can add considerable value to the life cover. 
  • Enhanced Cover An element offered by term plans of certain insurers is the flexibility to enhance the life cover during critical stages of  policyholder’s life. For instance, an insurer may allow policyholders to enhance the life cover by 50% at the time of marriage and at the time of turning a parent  25%. This allows policyholders to start with a modest cover and improve cover as responsibilities increase as also their ability to pay higher premium
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Below are the top 6 online term insurance plans in India
  1. ICICI Prudential i-Protect
  2. HDFC Life Click to Protect
  3. SBI Life e-shield
  4. Max Life
  5. Kotak Life e term Plan
  6. Bajaj Allianz i-secure
  7. LIC India