Simplifying Life Insurance in India
How to Buy Term Insurance Online & What are the Requirements?
Buying an online term plan that is perfect for you involves some checks, especially if you are the primary earner of your family and your close ones are financially dependent on you. It is imperative to keep some points in mind so that you can choose a well-suited term plan.
Read on to learn more about online term plans, their benefits, and how to buy one.
Table of Contents
What is an Online Term Plan?
Term Insurance is a life insurance policy that offers financial coverage to the policyholder for a fixed term. This certain number of years is known as the term of the policy. In case of the insured individual's untimely death during the policy term, beneficiaries receive the death benefit amount.
An online term plan is an insurance policy that you can purchase via an online platform. You can compare the online term insurance plans offered by different insurers based on their features and benefits. You can even select the most appropriate and complete the entire process online.
As our lives are getting more hectic day by day, securing the future of your loved ones is more convenient this way.
Eligibility Criteria for Buying Term Insurance
Documents Required for Buying Term Insurance
The following are the important documents required at the time of buying a term insurance policy:
Once you confirm your eligibility and have the required documents, you can go ahead with the purchase of the term insurance plan. Here are some points to be kept in mind:
- You should decide the sum assured after assessing your and your family's financial requirements.
- You should also check the add-ons or riders offered by the insurance company that would enhance the benefits of your term insurance plan.
- Make sure to select your insurance provider after checking their claim settlement ratio. It depicts an insurer’s readiness when it comes to settling claims.
Steps to Follow While Buying Term Insurance Online
If you are confused as to how to buy term insurance online, here are some simple steps that you can follow:
Step 1
Log in to the insurance company's website.
Step 2
Check all available insurance plans, including their features and benefits, and select the one that suits you the best.
Step 3
Click on the ‘Buy/Purchase’ option.
Step 4
Enter all the basic details like name, gender, date of birth, contact details, monthly details, etc. You will also be required to upload the relevant documents for KYC verification.
Step 5
Select the policy tenure and sum assured.
Step 6
If you want any additional coverage, select the riders you wish to add to the policy.
Step 7
Fill in your medical details such as height, weight, smoking habits, critical illnesses, etc. The insurer might also request you to upload documents of health check-ups.
Step 8
Select your preferred premium payment method after checking the premium amount payable.
Step 9
Check all the terms and conditions concerning your term insurance policy. In case of any doubt, feel free to connect with customer service for clarification.
Step 10
After you are completely sure about all the aspects of the insurance policy, make the necessary payment.
Step 11
Once your payment is successful, a soft copy of the policy will be sent to you via email. A hard copy will be sent to your residential address.
How to Calculate the Premium of Term Insurance?
The simple formula to calculate insurance premiums is the following:
Premium = (Risk Factor X Sum Insured) / Coverage Period
The components included in this formula are the following:
- Risk Factor - This is the risk relating to the insured item or person, which usually comes as a percentage.
- Sum Insured - The total sum required to be covered.
- Coverage Period - This is the time during which the insurance cover is active.
Different Factors Affecting Term Insurance Premium
1. Age
Normally, someone who is young will pay a lower insurance cost as they are less of a risk. The older you get, the more likely it will be that you could have health issues to contend with, and thus higher rates.2. Health Status
Your health and the number of medical issues you have before a policy becomes activated will impact your premium. In general, someone in good health will usually obtain cheaper rates than those with significant health concerns.3. Lifestyle Factors
Smoking or engaging in other risky habits may expose you to higher insurance bills. Smokers, for example, pay greatly more than their non-smoking counterparts due to the assumed risks of smoking.4. Coverage
The more coverage you have, the more you will pay for it. This implies the need to identify the appropriate coverage with affordability.5. Policy Period
Longer policies translate to more significant premiums than a short policy because the insurer covers the risk for a longer period.What are the Benefits of Buying Term Insurance Online?
With the advent of digitisation, you can now easily buy term insurance online. There are a number of reasons why online term insurance plans might be more beneficial than traditional insurance policies.
Transparency
Once you go through an insurer’s website, you can learn about all the features and benefits the term plans offer. This helps you make a better decision for your family's financial security.
Quick Comparison
The biggest benefit of purchasing term plans online is that you can compare different types of plans and choose one that suits your needs. Comparison is extremely important as you will be able to check the benefits, features and premiums payable for different plans at once.
Cost-effective
If you purchase a term plan online, you can compare several term insurances and choose the one that offers the most useful features at the lowest price. Therefore, you save a lot of money.
Lower Premium
If you purchase a policy online, you get it at lower rates than traditional plans. This is because online term insurance eliminates the need for an insurance advisor. Therefore, the insurance firm saves the cost of commission, and you get the advantage in the form of a reduction in premium.
Reduced Time
You can purchase a term plan online faster than traditional term plans. You do not have to visit the office branch multiple times. With just a click of a button, you can compare different term plans and pay for them seamlessly. This has become easier with mobile-friendly websites and applications.
No Intermediaries Involved
When you are buying a term plan online, all you need to do is fill out the required information, submit the documents, and complete all the formalities. You do not need to complete the purchase via an agent.
This gives you a clear understanding of what you are signing for. Further, you also get a proper understanding of the terms and conditions of the insurance policy.
User-friendly
Online term insurance plans come with various options for modifications. You can add some features and track the change in the premium amount in real-time. Further, you can personalise your plan and calculate the premium amount using an online term insurance calculator.
You can check all the combinations available and choose the one that fits your budget and suits your requirements.
Safe and Secure
The insurer websites offer safe payment gateways so that you can complete the payment process without any hassles of security.
Factors to Consider Before Buying Term Insurance Online
1. Amount of Cover
Determine how much your family may need if you are not around. A common guideline is that the cover should be 10 to 15 times the annual income. This amount will come in handy while paying monthly mortgage payments, kids' school fees, and other expenses for daily living.2. Policy Term
Choose a term appropriate for your financial responsibilities, such as when your kids will be independent or your mortgage will be paid out. The longer the terms, the better the security, but premiums are more expensive.3. Age and Health
Age and health status are significant factors in determining your premium rates and, in some instances, eligibility. In general, the younger one can purchase a policy, the more guaranteed the chance of lower premiums may get or be since health issues may develop later.4. Renewability and Convertibility
Look for policies that provide renewal coverage at the end of the initial term so you don't lose protection as time passes. These policies allow you to convert a term policy into a permanent one without getting examined afterwards when your health condition may have changed.5. Additional add-ons or Riders
Consider adding riders on features such as critical illness or accidental death, which can increase your coverage. These might be costly for premium, but these are layers of security on top of whatever you need.6. Claim Settlement Ratio
A claim settlement ratio of the insurer is also to be found. It is about how many claims were settled concerning the number of claims the insurer received. A higher ratio signifies the reliability and commitment of the insurer to honour claims. This promises comfort to you and your beneficiaries.How to Choose a Reliable Insurer for Term Insurance?
Research Insurer's Reputation
Try to get through the online reviews, ratings, and testimonials about the reputation of the insurer among its customers. Consumer advocacy sites or similar sources that you could rely upon would give you an idea about their service quality and reliability.Claim Settlement History
Understand the insurer's history and be aware of the speed of claim settlement and whether it is efficient. This helps you know about the support system when your beneficiaries really need it.Customer Service
Evaluate the quality of customer service by trying out a call or chat test and determining their willingness to respond. A good insurer will have accessible and caring customer service who can help you with questions or concerns.Terms and Conditions of the Policy
Read through the fine print in the policy to know its coverage limits, exclusions, and conditions. This ensures that the terms and conditions set in place are clearly understandable and fair, meaning you can expect what will be there and not have some surprise scenarios later down the line.Financial Stability
Research the financial health of an insurer through ratings of independent agencies. Suppose your policy requires to be reclaimed after a prolonged period. In that case, a good financial rating increases your chances that the insurer will pay to meet their obligations, thereby increasing security.Common Mistakes to Avoid While Buying Term Insurance Online
1. Underestimation of Coverage Needs
Most people do not consider financial responsibilities, so there is always a likelihood of under-coverage. All factors, such as debts, living expenses, and future needs, should be considered to ensure your loved ones are well covered.2. Lack of Reading Policy Terms
One of the prime mistakes that people make while buying an insurance policy is not reading the policy terms and conditions. One needs to know the dos and don'ts that will not shock them while making claims.3. Low Premium Deal
Everybody wants the cheapest premium possible, but the cheapest plan might miss out on coverage or benefits. It is a balance between affordability and adequacy of coverage and the reliability of the insurer to settle your claim.4. Not Reviewing Periodically
Failure to regularly review your policy may leave you underinsured as the situation changes with life. Review your coverage every now and then to confirm that it addresses your family's current needs, given the constant changes.5. Neglecting Riders
Omitting riders can leave you open to particular risks, such as critical illness or accidental death. Evaluate benefits to enhance riders that cover your policy and provide extra security for your family.FAQs about Buying Term Insurance Online
How can I purchase a term insurance plan from your website?
What types of term insurance plans are available in 2024?
What steps should I follow to purchase term insurance online?
Can term insurance be bought online?
Can I buy two term insurance policies together?
Do I get tax benefits if I opt for an online term plan?
What is the appropriate level of insurance coverage for me?
What is the sum assured in insurance policies?
Is it better to buy term insurance online or in person?
Is online term insurance safe?
Is a 3-year ITR mandatory for online term insurance?
What types of deaths are not covered by online term insurance?
What is the minimum income required to get online term insurance?
Other Important Term Insurance Guides
Other Important Articles Related to Term Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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