How to buy term life insurance online?
The e-commerce boom has made financial instruments, including insurance policies, readily available online. Buying a term insurance plan from your insurance provider’s web portal saves both time and money. Online purchases don’t involve an intermediary, and the transaction occurs directly with the company.
Steps to follow while buying term insurance online:
Assess your needs: The sum assured of your term insurance should be adequate to meet your family’s financial obligations in your absence. To determine the amount that will be sufficient, you can consider the following:
- Your current income
- Number of financial dependents in your family
- Your existing liabilities like mortgages, loans. etc.
- Funds required to meet your family’s current lifestyle
- The amount to be invested each month towards financial goals like a child’s education
- The rate of inflation
Most financial advisors recommend a sum assured that is at least 15-20 times your present annual income.
Select your insurance provider: Before buying a policy, you must pick a reliable insurance company. Here are some things to note:
- The claim settlement ratio of the insurer is a great way to ascertain the company’s credibility. The Insurance Regulatory and Development Authority of India (IRDAI) announces the claim settlement ratio of every insurance company each year. The figure explains the number of claims a policy provider settles against the total number of claims placed in that year.
- The solvency ratio of the insurer can determine their financial ability to meet their obligations to customers. A higher solvency ratio indicates fiscal stability.
- Instances of IRDAI norm violations and market reputation like grievance ratio can also highlight a company’s trustworthiness.
- The time the company takes to settle claims is another crucial factor to consider. Reliable brands take a couple of days to settle claims or offer interest for the additional days taken.
- Premium waive-off options in the case of permanent disabilities or terminal ailments are an added benefit that you can look out for when picking an insurer.
Calculate the Premium: You can use online Term Insurance calculators to determine the amount you will have to pay for your desired sum assured. The premium amount should fit into your monthly budget.
Enter your details: Visit the website of the insurance company you selected and enter details like your date of birth, gender, your habits like smoking or drinking, monthly income, and contact details.
Enter the sum assured and policy tenure: A rule of thumb is to opt for a longer tenure if you are younger and a shorter policy term if you are middle-aged. If you are young, your premium amount will also be less. Therefore, it is advisable to start your term plan early.
Decide on the insurance payout mode: Most policies allow you to select between different payout modes:
- A lump-sum payout to your nominee on your death: You can choose this if you have outstanding debts like a home loan.
- A portion of your sum assured in lump sum followed by regular monthly income for the beneficiary for a pre-specified term: This is useful for meeting life goals like a child’s marriage or higher studies.
- Regular monthly income for a specified duration: This is useful if the nominee is not used to handling a large sum of money at once.
- Increasing monthly income for a specified duration: This is beneficial to tackle the effects of inflation and provide for rising cost of living.
Choose appropriate riders: By investing a little extra, you can increase the financial safety net over your family. If you have a family history of critical ailments like heart attacks, kidney damage, or cancer, you can add a critical illness cover to your term plan. You need to pay a small additional charge with your premium and can get a lump sum amount as soon as you are diagnosed with a critical illness. This can help your family tide over the enormous expenses required for adequate healthcare. You can also opt for an additional death cover rider wherein if you pass away due to an accident, your family will receive additional payouts over your death benefit with an accident cover. This can help them cover the costs related to the accident.
Fill up the KYC form: Enter your name, address, and contact number. You will need to upload your ID proof like a PAN card or an Aadhaar Card, an address proof like a driving license or utility bills, an age proof like your passport, proof of income like income tax returns, and recent passport-sized photographs. You also need to fill up your beneficiary details carefully.
Enter your health details: You will have to enter information like your height, weight, alcohol or tobacco consumption history, medical conditions (if any), hospitalization history, occupational hazards based on the nature of your job, and other similar details. Make sure you disclose all your health details to avoid your beneficiary’s claim being nullified in the future.
Read policy terms and conditions: It is essential to understand policy exclusions (if any) like death due to natural calamities, terrorist activities, or narcotics abuse. After you agree to the terms, you will be taken to the payment gateway.
Make the payment: You can pay through net banking or with your credit or debit cards. If your proposal is approved, the soft copy of your policy will be emailed to you. The hard copy will reach you later by post.
To sum it up
Death is a traumatic event for the deceased person’s family. The demise of a breadwinner brings the additional turmoil of a financial crisis. Comparing deals and buying a suitable term insurance plan online can protect your family from future financial hardships.
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